Griffin's Citadel Will Pay Hedge Funds for Trading Ideas

Summary

Ken Griffin's Citadel is launching a program to pay other hedge funds for their best trading ideas, similar to sell-side alpha capture. Bloomberg's Mishal Kumar explains the rationale, noting that multistrat firms have more capital than they can deploy internally.

• Citadel plans to pay external hedge funds for trading ideas.
• The program is modeled after sell-side alpha capture pioneered by Marshall Wace.
• Multistrat firms like Citadel have excess capital due to strong returns and limited deployment capacity.
• Some hedge funds allocate to external traders; others use alpha capture for additional trading signals.
• The initiative reflects a broader trend of large hedge funds seeking new ways to deploy capital.