Research on JZL Quantitative Institutions: Jane Street - A Firm Practitioner of Ocaml Development Language

Introduction and Overview

Introduction and Overview

• Overview: Using the niche Ocaml language, do Market Making & Arbitrage's prop trading firm;

• Background: Jane Street was founded in 2000 by three SIG traders (Tim Reynolds, Rob Granieri, Michael Jenkins) and IBM development engineer Marc Gerstein, initially trading options and American depositary receipts;

• Business coverage: At the beginning of its establishment, Jane Street was famous for ETFs trading. While consolidating its position as a leader in ETFs trading, Jane Street is also a major participant in the stock, bond, option and cryptocurrency markets;

• secondary title

Core Business

• In 2020, Jane Street traded more than 10 trillion US dollars of securities, accounting for 1/3 of the transaction scale of the entire US ETF market and nearly 10% of the transaction scale of the US stock market. According to the financial data disclosed in the period, in the first six months of 2020, Jane Street's adjusted profit was US$6.3 billion, an increase of more than 1,000% over the same period in 2019, and its net transaction income in the first half of the year was US$8.4 billion. The profit level is twice that of Citadel Securities in the same period.

• traditional direction

1. Business in the United States

   Jane Street Capital,LLC: proprietary trading + market-making services for exchanges

   Jane Street Execution Services,LLC: Provides brokerage services to institutional clients and other third-party traders

2. Business in Europe

   Jane Street Financial Limited and Jane Street Netherlands BV, two entities regulated by the UK FCA and NAFM respectively, provide OTC services to European customers. Another company established in London, Jane Street Europe, provides proprietary trading and market-making services;

3. Business in Hong Kong

   Jane Street Hong Kong Limited (CE No. BAL548), which holds Type 1 and Type 2 regulatory licenses from the Hong Kong Securities Regulatory Commission, provides securities and futures brokerage services for Hong Kong customers;

• digital currency direction

  secondary title

About Crypto

• Jane Street began to set foot in the digital currency field in 2017, providing multi-currency market-making services including BTC and ETH for Robinhood, CEX, and DEX;

• In the same year, the founder of Alameda Research and FTX left Jane Street, together with Gary Wang, a former Google engineer and MIT alumnus, and Nishad Singh, a high school classmate who just graduated from Berkeley's computer science major, raised funds to start a cryptocurrency quantitative trading company Alameda Research has started its journey to become king in the field of cryptocurrency.

• In 2018, Jane Street released a self-developed trading platform JCX for digital currency trading, providing 24/7 trading services for the most actively traded encrypted tokens;

• Crypto investment

1. In December 2021, Jane Street participated in 1inch's US$175 million Series B financing, firing its first shot at investing in the Crypto level one track;

2. From 2022 to the present, Jane Street has completed 9 investments including the NEAR ecological decentralized lending agreement Bastion, the Terra ecological decentralized foreign exchange trading platform Vertex Protocol, and the ETH ecological decentralized lending platform Euler Finance around the main line of Defi;

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Tech Stack – Ocaml

• Language: Unlike other traditional/Crypto Native market makers who choose C, C++, Rust or Java (B2C2 front-end business technology stacks are mainly Java and Rust), Jane Street chooses a more niche programming language Ocaml[1] (caml language implementation form), its trading system, monitoring system, and data management system are all developed using Ocaml. According to the Stack Overflow 2022 annual developer survey report [2], JavaScript has been the most commonly used programming language for ten consecutive years with a vote rate of 65.36%, while Ocaml ranks 39th with a vote rate of 0.52% (the third from the bottom)

  [1] OCaml is a multi-paradigm language with high development efficiency and operation efficiency. Apple's Swift language and Rust language are both influenced by Ocaml language;

  [2] In this report, StackOverflow surveyed developers in 180 countries and regions around the world, and the data of respondents who spent less than three minutes in the survey will be discarded

• Advantages and Disadvantages:

1. Filter: Jane Street draws on the "Python Paradox" proposed by Y Combinator founder Paul Graham, "If a company chooses to write its software in a comparatively esoteric language, they'll be able to hire better programmers, because they'll Attract only those who cared enough to learn it.” Only the elite of the elite will give up Java and Python to learn a niche and highly academic programming language like OCaml, which has also become a natural filter for selecting the best developers ;

2. core team

core team

• founding team

1. According to the available information, Robert Granieri is the only active founder of the company. The company has no CEO, no hierarchy, and no clear management committee; quoting the evaluation of the Financial Times "It's secretive, it's different (the FT says it's a bit like an anarchist commune where job titles didn't count until recently), it's huge, and it's hugely profitable. It also pays unusually well.";

2. Co-founder Tim Reynolds is passionate about art and philanthropy. He established ÀNI Private Resorts and non-profit organization ÀNI Art Academies in 2010. Four countries, Anguilla and Dominica, respectively set up resorts and art colleges to provide free art education for ambitious art talents;

• Core member

1. secondary title

2. Yaron Minsky

disclosure information

• According to the data disclosed by Company House, Jane Street Europe's income is mainly composed of Principal Transaction. In 2021, due to the cliff-like decline in Principal Transaction revenue (year-on-year revenue drop of 86%), Jane Street Europe experienced a relatively large revenue decline;

• The reason, the official feedback is 1) long exposure to certain emerging markets; and 2) short exposure to certain developed markets."long exposure to certain emerging markets" and "short exposure to certain developed markets, and the combination of exposures contributed to the 86% decrease in revenues.”；

• In 2021, Jane Street Europe has a total of 332 employees. In the past three years, Technology and Trading positions have accounted for more than 70%. Compared with the per capita income of 5.7191 million pounds and the per capita salary of 1.1521 million pounds in 2020, there is a huge difference;

• Jane Street Financia's income is mainly composed of Management Fee and Performance Fee. In the past 3 years, the staff has grown steadily (390 people at the end of 2021), and the revenue is relatively stable;

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Fitch Ratings

• On July 24, 2020, S&P assigned a "BB-" issuer and senior secured debt rating to Jane Street Group LLC;

• On June 1, 2022, Fitch assigned Jane Street Group LLC an issuer default rating (IDR) and a senior secured debt rating of "BB+", with a stable outlook;

• Up to now, Jane Street Group LLC has 2 outstanding debts with a cumulative amount of US$3.05 billion, including US$2.45 billion senior secured term loans with LIBOR up 0.028% and US$600 million senior secured notes with a coupon of 4.5%;

• Fitch's concerns about Jane Street Group LLC are reflected in:

• A company's expansion into new geographies and/or asset classes (such as cryptocurrencies) may result in higher market, balance sheet and funding risks;

• The balance sheet exposure has increased significantly in the past 24 to 36 months, including the continuous inflow of funds into ETFs, the layout of new strategies and asset classes, etc.;

• job setting

job setting

• As a leading quantitative institution in the traditional field, Jane Street has a clear job setting, which consists of Trading, Technology and Infrastructure 3 business sectors;

• The academic background of the employees is not disclosed too much. Refer to the Target School settings of Jump Trading, which is also a top quantitative institution on Wall Street (only focus on Harvard, MIT, Stanford, Princeton, Yale, UC Berkeley, UIUC, Caltech, etc. School), and Hudson River Trading staff graduation school (as shown below) and Jane Street’s graduate school requirements for employees can be inferred;

• In addition, according to the Jane Street WeChat public account and other channels, Jane Street only opens positions for University of Oxford, University of Cambridge, Imperial College London Master of Science and Technology and G5 PhD in the UK; domestically, campus recruitment is only held in Qingbei Fujiao Activity.