After paying US$275 million for options order flow between April 2024 and March 2025, Morgan Stanley has given up on electronic options market making – selling the business arm to juggernaut Citadel Securities.
Reports that Morgan Stanley was closing its options market making unit emerged in June and follow the shuttering of its electronic equity market making business last month. The firm was one of the few traditional banks still paying for options order flow, competing with faster prop trading firms – like Citadel Securities.
Perhaps explaining Morgan Stanley’s decisions to sell, in the company’s Q2 results call CEO Ted Pick commented, “The cost to run [the equities] business has only gone up. And so not surprisingly, the top of the competitive heat is able to endure operating leverage and above-market returns, and the rest have to slug it out just to sort of make the nut.”
In the US, market makers paid more than US$1.19 billion for equity and options order flow in the first three months of 2025. Citadel Securities dominated the statistics, followed by Susquehanna and, increasingly, ION/IMC.
READ MORE: Payments for US retail flow reach record high, led by Citadel Securities & IMC
Citadel Securities states that it is the number one US retail options market maker, making markets across 1.3 million options spanning more than 20 exchanges and six countries. In March the firm spent US$85.9 million for options order flow, according to S3 data. Morgan Stanley, by contrast, paid US$26.7 million.
READ MORE: Payment for order flow
Citadel Securities and Morgan Stanley declined to comment on the purchase.
