Core Viewpoint - The acquisition of Morgan Stanley's electronic equity options market-making business by Citadel Securities signifies a shift in the trading landscape, where high-frequency trading firms are taking over markets traditionally dominated by investment banks [1][3]. Group 1: Acquisition Details - Citadel Securities has acquired Morgan Stanley's electronic equity options market-making business, which includes designated market maker (DPM) positions on major exchanges such as Cboe, Nasdaq, NYSE, and MIAX [3][5]. - The transaction was completed in July, although the price remains undisclosed [3]. - Morgan Stanley was the last major bank actively involved in electronic market-making on Wall Street [3][5]. Group 2: Market Dynamics - Citadel processed over 20% of U.S. stock trading volume in Q1 2025, generating profits of $1.7 billion during the same period [5]. - Citadel has become the leading market maker in U.S. equity options, reflecting a broader trend of banks exiting high-frequency market-making due to regulatory reforms post-2008 financial crisis [5][7]. - High-frequency trading firms like Citadel, Jane Street, and Susquehanna have rapidly gained market share due to their technological and scale advantages [5][7]. Group 3: Retail Trading Trends - Options trading has surged in popularity among retail investors, with Citadel capturing approximately one-third of the payment for order flow (PFOF) market, compared to Morgan Stanley's 6% [7]. - The growth in retail options trading is driven by the low-cost and high-leverage characteristics of options, attracting significant participation from retail investors [9]. Group 4: Future Outlook - Citadel's acquisition is part of a broader strategy to expand into more asset classes, positioning itself as a new core player in Wall Street's financial infrastructure [7]. - The exit of traditional banks like Morgan Stanley from electronic market-making indicates a declining role for these institutions in this sector, while high-frequency trading firms are increasingly embedding algorithm-driven trading systems into market structures [7][10].