Jim Esposito (2:44)

Not yet. I would say we're trying to apply our skills and Experience that made us so successful in equity markets to the fixed income markets. And we're taking our time. It's a very balanced and measured build at this moment. So there's no definitive plan as to what product will be rolled out next. Will it be high yield bonds, emerging markets, mortgage backed securities? I don't think we're that far along. We want to master the products that we're currently trading and. And then you'll see us grow from.

Interviewer/Host (3:16)

There because there's quite a lot. Also on tokenization, again, if you look at regulation, where do you see the best and biggest opportunity?

Jim Esposito (3:23)

I think it's helpful. I think we're about to get a much more defined rule set around the trading of digital assets and that will be important for the market at large. Definitely be important for Citadel Securities. So that would be a product expansion that you could expect to see us get more active in, assuming we get a defined rule set. At our conference today, we have the founders of Kalshi who are big making a market for event contracts. You can think of that as making positions or trades in terms of the probability of a political outcome or an economic release. We're not yet involved in event contracts, but there's no reason why we couldn't consider that in the future.

Interviewer/Host (4:07)

Jim, when you look at AI and computing, how does it change? Building out of Citadel securities but also hiring?

Jim Esposito (4:13)

Yeah, I'd say first with our clients. The topic top of mind right now is clearly how can we support our clients to incorporate AI to either make them more operationally efficient or to make them better investors. And so we're spending a lot of time with our clients around that topic. In fact, as you saw, a major theme really underpinning this conference today is AI. We brought a lot of the best from the west coast here to New York City. We had Jensen, the CEO of Nvidia, this morning, and I think that opened up the minds of our clients in a very profound way. And so AI is top of mind for our clients. It's top of mind for us. And I'm pleased to report we are making some progress around that front.

Interviewer/Host (5:03)

What are clients asking today, actually Citadel securities when it comes to AI or what are they asking you to try and understand where AI goes next?

Jim Esposito (5:11)

Yeah, I think generally we think a lot about our own content. What differentiates us from the big banks? And so we don't want to be a me too bank in terms of the content that we provide to our clients. So we're doing maybe what you would expect us to do. We have differentiated skills around quantitative finance, around leveraging technology. Citadel securities has been in business for 23 years. We were built as a technology driven first organization. That's core to who we are. That's what we're leading with in our client conversations. And so how do they get more efficient? How do they get smarter and become better investors from leveraging and harnessing the power of AI?

Interviewer/Host (5:58)

Jim, we also talked about liquidity a little bit at the conference. I certainly had a conversation with Maria Draghi when we touched on that. You've in the past talked about, for example, teaming up with some of the smaller banks.

Jim Esposito (6:08)

Right.

Interviewer/Host (6:08)

To help your clients with some of the orders there. What conversations have you had recently that point into that direction?

Jim Esposito (6:15)

Yeah, this is no longer a strategic idea, it's actually now playing out. So we are attempting to provide mid tier banks liquidity from Citadel securities so they can better service their clients. I think There are probably 100 banks around the globe that want to service their end user client in markets, jurisdictions, in places that we're never going to touch. What are we great at? We're great at making markets, providing liquidity. And so if you're some captive client sitting in Latin America, you might want to get covered by a bank where you have a relationship with. We're never going to meet or touch that client, but we can provide the mid tier bank the liquidity to better service their client. And we're starting to set up a whole mid tier liquidity ecosystem to service these mid tier banks. It's still early days, but we've seen signs where this model can work. It serves the end user client well and it's servicing and allowing those mid tier banks to be much, much more competitive against larger players.

Interviewer/Host (7:26)

And how do you think about the markets in this kind of environment? So given the volatility that we've seen, will it, will it stay like this or does it die down from here until the end of the year and beyond?

Jim Esposito (7:37)

Yeah, look, there's a lot of talk about is the capital expenditure for AI running too high? People are starting to speculate, are we in some form of a bubble? I think a lot of the macro discussion in markets sort of correlates to what's going on and what we're talking about at this conference around AI. I think if we can have modest productivity gains in the real economy by better leveraging AI, market valuations look absolutely attractive. You don't need a big productivity boost in order to support these valuations. By the way, there's also a lot of talk about growing stocks of debt in developed countries. How do these countries service their debt? They can grow their way out of it with productivity gains. So I think that's the big bet. Don't think we're in a bubble right now. Reasonably confident we will get these productivity gains. But that's where the macro discussion really hinges right now.

Interviewer/Host (8:35)

Jim, thank you so much for your time today. That was Esposito there, the president of Citadel Securities.

Podcast/Radio Announcer (8:40)

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