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The company’s stock-based compensation in 2025 reached an average of $1.5 million per employee

OpenAI is paying employees more than any tech startup in recent history, according to financial data it has shown investors.

The company’s stock-based compensation is about $1.5 million per employee, on average, across its workforce of roughly 4,000.

That is more than seven times higher than the stock-based pay Google disclosed in 2003, before it filed for an initial public offering in 2004. The $1.5 million is about 34 times the average employee compensation of 18 other large tech companies in the year before they went public, according to a Wall Street Journal analysis of data compiled by Equilar. The analysis reviewed major tech IPOs over the last 25 years.

The compensation figures have been adjusted into 2025 dollars to account for inflation.

An OpenAI spokesman declined to comment.

To keep its lead in the AI race, OpenAI is doling out massive stock compensation packages to top researchers and engineers, making them some of the richest employees in Silicon Valley. The equity awards are inflating the company’s heavy operating losses and diluting existing shareholders at a rapid clip.

As an AI arms race intensified this summer, frontier labs such as OpenAI faced pressure to increase employee pay after Meta Platforms Chief Executive Mark Zuckerberg began offering pay packages worth hundreds of millions of dollars—and in some rare cases $1 billion—to top executives and researchers at rival companies.

Zuckerberg’s recruiting blitz swept up 20-plus OpenAI personnel, including ChatGPT co-creator Shengjia Zhao. In August, OpenAI gave some of its research and engineering staff a one-time bonus, with some employees receiving millions of dollars, The Wall Street Journal previously reported.

The financial data, shared with investors over the summer, shows that OpenAI’s stock-based compensation was expected to increase by about $3 billion annually through 2030.

The company recently told staff it would discontinue a policy that required employees to work at OpenAI for at least six months before their equity vests. That development could lead to further compensation increases.

OpenAI’s compensation as a percentage of revenue was set to reach 46% in 2025, the highest of any of the 18 companies except for Rivian, which didn’t generate revenue the year before its IPO. Palantir’s stock-based compensation equaled 33% of its revenue the year before its IPO in 2020, Google’s was 15% and Facebook’s was 6%, the analysis shows.

On average, each company’s stock-based compensation made up about 6% of revenue among tech companies the Journal analyzed in the year before their IPOs, according to the Equilar data.

News Corp, owner of the Journal, has a content-licensing partnership with OpenAI.

The $2.5 billion deal could herald a new era for China-linked AI companies and U.S. investors

Meta’s agreement to buy Manus was valued at $2.5 billion, according to people familiar with the matter.

The deal included a $500 million retention pool for the startup’s employees, one of the people said.

The founders of Manus made decisions to distance it from its Chinese roots, helping position the company for U.S. investment.

Workers at Butterfly Effect, an artificial-intelligence startup with Chinese roots, gathered in March to count down to the launch of a demo of a new AI-powered tool called Manus.

Released in the shadow of DeepSeek, a China-built AI model that rocked the U.S. market in January owing to its advanced capabilities and low cost, Manus became an overnight hit. The product, which used models from Anthropic and others to produce detailed research reports and perform a host of other tasks, showcased the talents of China’s entrepreneurs and startups in a burgeoning global battle for AI supremacy.

The assumptions that underlie the East-West divide were turned upside down Monday when Meta Platforms META 1.10%increase; green up pointing triangle said it was buying Manus, which is now based in Singapore. The deal, which was valued at $2.5 billion, according to people familiar with the matter, included a $500 million retention pool for the startup’s employees, one of the people said.

Chinese AI chip makers, chatbot developers and robotics startups have recently raised billions of dollars and are preparing for initial public offerings in Shanghai or Hong Kong. But they still face challenges squaring off with U.S. rivals that can access enormous sums to compete globally.

The founders of Manus made strategic decisions to distance it from its Chinese roots, helping position the company for U.S. investment.

Winston Ma, a professor at New York University School of Law and a partner at Dragon Capital, said that if the deal closes smoothly, “It creates a new path for the young AI startups in China.” The question is “whether D.C. will support this or say this is just another way of U.S. capital being invested into a Chinese company,” he said.

Before being approached by Meta, Manus executives and the startup’s investors weighed staying independent and raising substantially more capital, people familiar with the matter said. Like many successful AI startups, Manus faced a difficult reality: Without a platform partner such as Meta, it would be challenging and costly to reach global scale, and raising additional capital could make the company too expensive for potential suitors.

Meta spokesman Andy Stone said that there would be no continuing Chinese ownership interests in Manus after the transaction and that the startup would discontinue its services and operations in China.

Meta’s deal surprised some officials in Beijing, some of whom disliked the agreement because they considered Manus an example of China’s AI power, people familiar with the officials’ thinking said. They believed that the sale would give the U.S. access to technology developed by Chinese engineers and encourage other startups to pursue a similar funding path, the people said. Beijing appears to have few tools to influence the deal given Manus’s foothold in Singapore.

In Washington, the reaction was muted, a signal that Manus’s moves to avoid violating U.S. rules that restrict outbound investments in key technologies eased concern about its China ties.

“The indicators on this one seem to be all pointing at least on the surface in the right direction,” said Chris McGuire, who worked on technology-export controls in the Biden administration and is now a senior fellow at the Council on Foreign Relations. He views the deal as evidence that export and investment restrictions work and could squeeze other Chinese AI companies, pushing them to do more deals with U.S. partners.

The response in Washington is a departure from earlier this year, when Trump administration officials including members of the National Security Council worried about a $75 million fundraising round for Manus led by the U.S. venture firm Benchmark, people familiar with the matter said.

Shortly afterward, the Treasury Department began reviewing whether the funding round ran afoul of rules banning investments in critical technologies for countries that pose national-security risks, the people said. The issue generally fell off the radar of many administration officials after Manus moved its headquarters to Singapore, they said. A Treasury spokesman declined to comment.

Manus’s core leaders are two young Chinese entrepreneurs, Xiao Hong and Ji Yichao—also known as “Red” and “Peak.”

Xiao, born in 1993 in a small city in China’s southern province of Jiangxi, went to Huazhong University of Science and Technology in Wuhan to study software engineering. After graduating, he founded a company in Wuhan to develop software for the Chinese tech company Tencent’s popular messaging and payment app, WeChat. Tencent later invested in his company.

Ji, born in 1992, grew up in Colorado and Beijing and went to a university in Beijing to study computer science. When he was in high school, he created a browser app for Apple’s iPhone, called Mammoth Browser, which later became popular. In 2012, he started his own startup, Peak Labs, and received funding from venture-capital firms such as ZhenFund and Sequoia China—now called HSG.

Xiao set up Manus’s parent, Butterfly Effect, in 2022 and launched a ChatGPT-powered application for browsers, called Monica. The Butterfly Effect apps targeted markets outside China, mainly North America, Japan and South Korea, Xiao said in a recent podcast. Butterfly Effect had offices in Beijing and Wuhan.

In October 2024, inspired by the San Francisco-based AI coding tool Cursor, Butterfly Effect started developing Manus, which used several American AI models that aren’t available in China. The project’s name, “Manus,” came from the Massachusetts Institute of Technology’s Latin motto, “Mens et Manus,” meaning mind and hand.

Manus in March released a demo of its AI agent, which is designed to handle more-complex tasks than a typical chatbot, such as producing a 100-page research report, generating a slideshow or building a website. At the time, most of its researchers and engineers were based in China.

Some in China called it another “DeepSeek moment.” An invitation code that gave people early access to the tool was resold for more than $1,000 on social-media and e-commerce sites.

Earlier this year, several local governments in China approached Manus and offered to invest in the startup, but its founders turned them down, according to people familiar with the matter. They were concerned that such connections could cause scrutiny in the West and create challenges for its global business, the people said.

Manus also shelved a plan to join with Alibaba to introduce a Chinese version of the tool that had been announced in March, people familiar with the plan said.

Around that time, Manus secured the funding that drew scrutiny in the U.S. It soon moved its headquarters to Singapore and laid off some employees in China.

Manus has since expanded its team in Singapore, recruiting new staff and showering the city-state’s subway platforms with its black-and-white logo. In recent months, Manus has announced partnerships with Microsoft and the payment company Stripe.

Earlier in December, Manus said its revenue run rate, a metric used by startups representing a short-term revenue figure that has been annualized, had risen to $125 million from $90 million in August.

Meta began negotiations for an acquisition in mid-December, and Mark Zuckerberg wanted to reach an agreement by the end of the year, people familiar with the matter said. Some existing shareholders of the startup didn’t expect the company to be bought out so quickly, the people said.

Selling to Meta gives Manus access to distribution channels such as WhatsApp and Instagram and a well-funded owner able to help cover computing and infrastructure costs. Meta said it plans to continue to operate and sell Manus’s service and integrate it into its suite of social-media products.

“Manus’s exceptional talent will join Meta’s team to deliver general-purpose agents across our consumer and business products, including in Meta AI,” Meta said in a blog post.

The deal marks a quick exit for Benchmark, as well as the earlier investor HSG, the venture-capital firm led by the star Chinese technology investor Neil Shen. Benchmark turned an investment that drew intense criticism from certain members of the Silicon Valley elite into a decisive win.

Firms anticipate more spinoffs, crypto M&A and participation from sovereign-wealth funds

Megadeals returned in full force in 2025. Wall Street is already bracing for another wave in 2026.

There were a record 68 transactions valued at $10 billion or more announced globally this year, according to data from LSEG going back to 1980. That drove the average annual deal size to a new high of nearly $227 million.

“Large deals are driving the market. And when you see big deals, it’s a sign of CEO and boardroom confidence,” said Ivan Farman, global co-head of M&A at Bank of America.

Farman said he and his team are anticipating momentum will continue in 2026 and beyond, and across industries.

This year’s action picked up as concerns around President Trump’s tariffs were subsiding, and bankers and lawyers say it hasn’t slowed down since. One lawyer said she even got messages from clients on Thanksgiving—a 24-hour window that in past years has typically been sacrosanct, even on Wall Street.

In media, Netflix struck a $72 billion deal to acquire Warner Bros. Discovery’s WBD 0.52%increase; green up pointing triangle studios and HBO Max streaming service, prompting Paramount Skydance PSKY 0.07%increase; green up pointing triangle to launch a $77.9 billion hostile takeover bid for the entire company.

In July, Union Pacific agreed to buy Norfolk Southern for $72 billion, in a bid to create the first U.S. transcontinental railroad.

A couple months later, videogame maker Electronic Arts said it would go private in a $55 billion deal.

In November, Huggies diapers owner Kimberly-Clark agreed to buy Tylenol maker Kenvue for $40 billion.

Jonathan Davis, a corporate partner at Kirkland & Ellis, said companies are moving fast because they don’t want to miss the boat.

“For the first time in several years, there’s a growing perception that the failure to act quickly risks losing the asset,” he said.

Still, he cautioned that there have been numerous times in the past few years when it seemed as though dealmaking activity was about to take off before something got in the way. “I am super bullish, but cautiously so,” he said.

Lawyers at Wachtell, Lipton, Rosen & Katz noted in a memo to clients this month that a significant portion of this year’s deal volume was driven by private-equity firms jumping back into the water. A number of the big private-equity deals this year involved multiple firms teaming up, such as Blackstone and TPG’s acquisition of women’s-health company Hologic.

Lawyers at Wachtell say they are monitoring themes next year including more spinoffs, more crypto M&A, and a greater influx of capital into deals from sovereign-wealth funds, particularly those in the Middle East.

Another sign of the anticipated boom times ahead: Banks and law firms from Wells Fargo and Lazard, to Paul Weiss and Kirkland & Ellis, are continuing to invest in hiring.

Management teams and their advisers are learning to navigate the Trump administration’s more lax approach to enforcement around tie-ups, another factor contributing to the uptick in deals. But there still can be curveballs.

“The odds that a deal goes through today is materially higher than it was a few years ago,” said Lazard Chief Executive and Chairman Peter Orszag. But he said the odds that the White House or a cabinet agency getting directly involved is also materially higher.

Overseas, the mood isn’t quite as upbeat.

Europe is the second-largest destination globally for buyers after the U.S. market, typically making it a key driver for dealmaking. But it was a laggard this year. And harsh commentary from Trump and America’s business community about Europe’s foreign policy and business regulations raise questions about its performance in 2026.

“Europe is seen as divided and slow,” said Birger Berendes, head of continental European M&A at Jefferies Financial Group. He said that is a deterrent for U.S. buyers, unless targets offer strategic technology or are market leaders.

M&A value involving European targets rose 23% in 2025, highlighted by such deals as the $18 billion tie-up between Keurig Dr Pepper and Amsterdam-based JDE Peet’s.

Still, that percentage gain was the lowest globally among the six biggest M&A regions tracked by LSEG data. The number of U.S. buyers targeting the region fell to its lowest level since 2020.

Mar-a-Lago sent an 18-year-old spa worker on a house call to Jeffrey Epstein in 2003. She complained to her bosses that Epstein pressured her for sex.

Jeffrey Epstein wasn’t just a frequent visitor to Donald Trump’s Mar-a-Lago club in the late 1990s and early 2000s. The club was also sending spa employees—usually young women—to Epstein’s nearby mansion for massages, manicures and other spa services, according to former Mar-a-Lago and Epstein employees.

The house calls went on for years, even as spa employees warned each other about Epstein, who was known among staff for being sexually suggestive and exposing himself during the appointments, according to the former Mar-a-Lago employees.

The spa occasionally provided house calls for members. Epstein wasn’t a dues-paying member of the club, but Trump told staff to treat him like one, the employees said. Epstein had an account at the spa where his companion, Ghislaine Maxwell, booked appointments on his behalf.

They came to a halt in 2003, after an 18-year-old beautician returned to the club from a house call to Epstein and reported to managers that he had pressured her for sex, former employees said.

A manager sent Trump a fax relaying the employee’s allegations and urged him to ban Epstein, some of the former employees said. Trump told the manager it was a good letter and said to kick him out.

The beautician disclosed the house call to the club’s human resources team, one of the former employees said. The incident wasn’t reported to Palm Beach police, according to the former employees and police.

The department didn’t begin investigating Epstein until two years later, when a parent told them Epstein molested a 14-year-old girl from a local high school. Epstein was arrested in 2006 after several underage teens told police he paid them for sex.

White House Press Secretary Karoline Leavitt said Tuesday that the Journal was “writing up fallacies and innuendo in order to smear President Trump.”

“No matter how many times this story is told and retold, the truth remains: President Trump did nothing wrong and he kicked Jeffrey Epstein out of Mar a Lago for being a creep,” Leavitt said in a text message.

Representatives for the Trump Organization didn’t respond to requests for comment.

The beautician’s allegations, and the Mar-a-Lago spa’s practice of dispatching workers to Epstein’s home, have not been previously reported. Employees sent on house calls, like the 18-year-old beautician, were typically licensed by the state boards of cosmetology or massage therapy.

The allegations came three years after Maxwell recruited another employee, Virginia Giuffre, who said she was 16 years old when she left the spa to work for Epstein. Giuffre died by suicide this year.

The Wall Street Journal identified four other Mar-a-Lago employees who were listed in Epstein’s address book, which was obtained by the FBI in 2009.

By the time Epstein was banned from the spa in 2003, disquiet over his presence at the club had been bubbling for years—including from Trump’s second wife, Marla Maples, who in the mid-1990s warned her husband and others there was something “off” about Epstein, according to former employees.

The relationship between Epstein and Trump, spanning from the 1980s to the early 2000s, has been the focus of intense scrutiny this year. The Justice Department, in response to a law passed by Congress in November, has recently begun releasing thousands of documents from its files on Epstein, some of which reference Trump. Being mentioned in the files isn’t an indicator of wrongdoing. Trump has said he cut ties with Epstein years before Epstein’s 2006 arrest.

Trump and Epstein continued to cross paths after the spa banned Epstein and Maxwell in 2003. They were in fierce competition for a Palm Beach property up for grabs in bankruptcy in late 2004, and Epstein’s message book showed two calls from Trump the month of the auction, which Trump won.

In 2008, Epstein reached a controversial deal with federal prosecutors in which he pleaded guilty to solicitation of prostitution and procuring a minor to engage in prostitution. He was arrested a second time on federal sex-trafficking charges in 2019 and died in jail awaiting trial. A medical examiner ruled it suicide.

Trump has given a variety of answers about when and why he cut Epstein off from Mar-a-Lago and then ended their friendship altogether. “I had a falling-out with him. I haven’t spoken to him in 15 years,” Trump said after Epstein’s 2019 arrest.

When asked this summer why he stopped socializing with Epstein, Trump said it was because Epstein had lured away some of his staff. “Because he did something that was inappropriate. He hired help,” Trump said. “I said, ‘Don’t ever do that again.’ He did it again, and I threw him out of the place, persona non grata.”

Trump, in a social-media post on Christmas Day, said he was the “only one who did drop Epstein, and long before it became fashionable to do so.”

The White House, meanwhile, has said that Trump kicked Epstein out of Mar-a-Lago for “being a creep to his female employees, including Giuffre.”

Into the early 2000s, Trump continued to associate with Epstein, saying in a New York magazine profile in 2002 that he was “a lot of fun” and “likes beautiful women as much as I do, and many of them are on the younger side.” A letter bearing Trump’s signature and a drawing of a naked woman was part of a book celebrating Epstein’s 50th birthday in January 2003.

Trump sued The Wall Street Journal in July over its article about the letter, calling it “nonexistent” and alleging defamation. Congress has since obtained the letter from Epstein’s estate and publicly released it. The Journal has moved to dismiss the lawsuit.

Maxwell regularly visited the Mar-a-Lago spa, where she booked Epstein’s in-home appointments and charged services for herself to the account in Epstein’s name. The spa made house calls for some members but preferred that they come in for services, former employees said.

Maxwell also used the spa to recruit young spa workers for side jobs, which weren’t authorized by the club. She said they could make some extra cash by giving massages to her friend, former employees said.

Maxwell went to other spas in the Palm Beach area in search of massage therapists for Epstein, according to a 2009 deposition by Epstein’s house manager, who said he drove her as she made her rounds. Maxwell was convicted in 2021 for her role in Epstein’s sex-trafficking and is serving a 20-year prison sentence.

Representatives for Maxwell declined to comment.

Maples, who married Trump in 1993, widely shared concerns with Mar-a-Lago staff about Epstein soon after the club opened in 1995, according to former employees.

She was vague about her reasons for disliking Epstein. She told employees that something about Epstein was “wrong” and “off,” and that she worried about his influence on Trump. The comments were out of character for Maples, who rarely spoke ill of anyone to staff, the former employees said.

Some of the former club employees said that Maples communicated her concerns to Timothy McDaniel, who worked as a bodyguard for the Trump family and oversaw security at their Florida properties. McDaniel didn’t respond to requests for comment.

Maples told Trump that she was uneasy about Epstein’s presence and that she didn’t want to spend time with him—and didn’t want Trump to either, according to former employees and people close to Maples.

But Epstein continued to attend parties and events at Mar-a-Lago.

Representatives for Maples didn’t respond to requests for comment.

Trump and Epstein had known each other since the 1980s and once made a bet over whether Maples was pregnant, according to a story Epstein retold in emails sent in 2015 and 2016 that were recently made public by Congress.

As payment for losing—Maples gave birth to a daughter, Tiffany, in October 1993—Epstein wrote that he sent Trump a truckload of baby food worth $10,000.

Trump’s friendship with Epstein outlived his second marriage. He and Maples announced their separation in 1997 and finalized their divorce in 1999.

By then, Epstein had developed a reputation among spa staff for being inappropriate on house calls, former employees said.

A massage therapist who worked at Mar-a-Lago in the late 1990s and early 2000s recalled asking managers why Epstein couldn’t come to the spa, as they talked about sending someone 2 miles away to his house.

The bosses told her that Epstein preferred spa services in the privacy of his own home, and warned the employee that Epstein sometimes exposed himself during massages.

In 2000, Maxwell offered Giuffre, then an attendant in the spa, work as a massage therapist for Epstein. On her first visit to the mansion, Giuffre said that Maxwell brought her into a room where Maxwell took off the teen’s clothes, including a Mar-a-Lago polo shirt, and Epstein sexually assaulted her, according to her posthumous memoir, published this year.

Over the next two years, Giuffre alleged, Epstein sexually abused her and trafficked her to other powerful men. Giuffre said in a 2016 deposition that she never observed Trump participating in any abuse of women or girls and wrote in her memoir that “Trump couldn’t have been friendlier” when she met him.

Trump was asked by a reporter this year whether Giuffre was one of the employees that Epstein had poached. “I think that was one of the people, yeah. He stole her,” Trump said in July.

Maxwell continued to scout for women in the spa in the early 2000s, handing out a phone number to young staff, former employees said. She told them to call if they or their friends wanted to make extra money.

Asia’s wealthy turn to Switzerland to park assets

Swiss private banks report rising demand from Asian family offices and rich individuals to book assets in Europe

Swiss private banks are expanding their Asia-focused teams onshore in Switzerland, after a sharp rise in referrals and inquiries from the region during the past two years.

Bankers said Asian family offices and ultra-wealthy individuals were increasingly shifting their money to Switzerland, seeking direct relationships and a haven for assets including physical gold in vaults.

Clients wanted their investments to be legally booked and held in Switzerland even if they live and work elsewhere, the bankers said.

Switzerland has held its ground as the world’s pre-eminent haven despite years of predictions that the erosion of bank secrecy and international pressure on offshore finance would diminish its status.

The country remained the top hub for offshore wealth in 2024, with $2.74tn in assets under management, according to Boston Consulting Group.

Rival centres including Hong Kong, Singapore and Dubai have been growing faster in recent years. Hong Kong had $2.65tn in assets under management last year, according to BCG, while Singapore had $1.92tn.

But the two Asian centres have become vital hunting grounds for Swiss private banks, serving as fast-growing sources of new clients, and many of those assets ultimately flow back to Switzerland.

The number of deposits by residents of Hong Kong and Singapore has shot up in recent years, according to data from the BIS and SNB.

The majority of clients continued to book in Asia, but the percentage interested in Switzerland was increasing, said Omar Shokur, chief executive for Asia private clients at Lombard Odier, the private bank.

“In the past, very few clients were requesting additional booking in Switzerland. Now more and more are asking if they can book in Switzerland. This is the new dimension starting,” he said.

The shift marks a break from a decade in which proximity and convenience had made Hong Kong and Singapore the natural hubs for Asian wealth.

Many Swiss banks expanded in Asia over the past two to three decades to serve the region’s growing number of wealthy, helping pioneer the private bank model in the region.

But bankers say political shocks across the region such as the imposition of a strict new national security law in Hong Kong in 2019, followed by Russia’s full-scale invasion of Ukraine, have heightened concerns among Asia’s rich about the security of their assets.

Christian Cappelli, head of the Asia desk at Julius Baer in Zurich, said that back in 2010 the requirement of Asian clients to book in Switzerland was “very small”.

“There was no benefit. Booking in a place such as Singapore was just as good,” he said. That had changed since 2019, he said.

“Clients increasingly felt that geopolitically things were less predictable, and therefore it was important to have assets in different jurisdictions,” Cappelli said.

Christian Frie, head of Asia-Pacific business in Switzerland for LGT Private Banking, said Switzerland had become the “booking centre of choice” for Asian clients outside the region.

“Most Asian clients we see allocate around 10 to 15 per cent of their assets outside of the region and in some cases more. When they choose a place outside of Asia, they tend to pick Switzerland,” Frie said.

Another executive for a Swiss private bank said the non-dom tax rules in London had reduced the UK’s appeal for Asian clients who had long been drawn there especially for their real estate portfolios. “Switzerland was a beneficiary of that,” the person said.

Banks have expanded their Asia desks in Switzerland in response.

Julius Baer has had an Asia desk onshore in Switzerland since the 1990s but has stepped up hiring significantly since 2022. UBS’s Asia desk now has more than 100 people, according to people familiar with the matter, while LGT’s Asia desk has increased from fewer than 10 people in 2023 to nearly 30 across Zurich and Geneva. 

Frank Niedermann, UBS’s head of wealth management for Asia-Pacific Switzerland, said some family offices from Hong Kong and Singapore now “want an Asia and a European HQ”.

But he cautioned that part of Switzerland’s allure still required demystifying. “There is that magic of a Swiss account but we need to explain what that actually means,” he said.

“We know, for example, when it comes to equity trading we cannot be competitive with places like Hong Kong because of the stamp duty. But there are other strengths.”

The upstart exchange drawing traders to the world’s best-performing stock market

Nextrade has become a hit among South Korea’s risk-loving amateur investors

An upstart challenger to South Korea’s main bourse has drawn legions of risk-loving traders, capturing nearly a third of the market in just months and propelling the country to become the world’s best-performing major equities market this year.

Nextrade launched in March to break the Korea Exchange’s 70-year monopoly on equities trading and advance the country’s capital markets. By November, it was handling nearly a third of turnover by value in South Korea’s $2.4tn in stocks. Daily trading value topped Won11tn ($7.4bn), about double that of Singapore Exchange, according to Nextrade.

The alternative platform has appealed to South Korea’s amateur investors, who are known for their aggressive trading strategies and high risk tolerance. They have become a dominant force in the local stock market, fuelling the main index’s gains of 75 per cent this year.

Domestic retail investors accounted for 85 per cent of Nextrade’s trading value, compared with 10 per cent for foreigners and 5 per cent for domestic institutions. The exchange has been popular among white-collar workers for its longer hours — 12 compared with KRX’s six and a half, allowing them to trade during commutes — and fees that are 20 to 40 per cent lower.

Kim Hak-soo, Nextrade’s chief executive, called its rapid growth “exceptional”, especially when compared with peers in other countries. “It took about 10 years for other alternative exchanges in countries like Japan and Australia to reach our level of trading volume,” he told the Financial Times.

In the US, about 80 alternative platforms handle 20 per cent of total trading volume, while three such exchanges in Japan make up about 10 per cent of the turnover, according to South Korea’s Financial Services Commission.

“Retail investors in Korea are very dynamic,” said Kim. “They have no resistance against new systems or technology.”

Nextrade’s rapid growth has concerned regulators, who introduced rules at the end of October to limit its trading volume to 15 per cent of KRX’s.

Unlike KRX, Nextrade, which is collectively owned by the Korea Financial Investment Association trade group and local brokers, is involved in stock trading only. It does not engage in listings, regulatory disclosures, clearing or monitoring.

To meet the new rule, the platform had to halt trading of some popular stocks such as Kakao, Kepco and Mirae Asset to reduce its volume. About 630 stocks are now traded on the exchange, down from nearly 800 at its start. By comparison, 2,800 stocks are traded on KRX.

Kim questioned the rule’s rationale and said the ceiling should be eased for fair competition in the long run. Nextrade said authorities should entrust an independent third party with clearing and monitoring as in other advanced markets.

“There are similar rules in Japan, but ours are stricter,” said the former financial regulator. “Authorities are aware of the problems and are likely to review the rules for change over time.”

Nextrade’s popularity has put KRX on alert. The main bourse has temporarily lowered fees and is considering expanding trading hours to protect its market share.

In order to differentiate further from KRX, Kim is trying to introduce digital tokens linked to K-pop song licences, as well as leveraged and inverse exchange traded funds. The platform recently formed a tie-up with Musicow, a marketplace that trades securitised music royalties.

“Think about how much interest trading digital tokens of BTS songs will draw, given the strong K-pop fandom at home and abroad,” said Kim. “K-culture is one of our country’s most powerful industries that has not been tapped much by equity investors.”

Nextrade is preparing to list “riskier” ETF products in the second half of next year to lure more domestic investors who have piled into US markets for quick returns.

South Korean investment in US equities rose more than 50 per cent this year to a record $161bn at the end of November, according to the Korea Securities Depository.

“We need more attractive products to induce more inbound investment flows,” said Kim.

Kang Sohyun, a researcher at the Korea Capital Market Institute think-tank, wrote in a report earlier this year that Nextrade had “materially contributed” to an overall increase in trading value in South Korea’s stock market by bolstering liquidity.

The constraint on Nextrade’s market share, she said, “risks undermining the original policy intent of introducing a multimarket system, which is to foster competition and drive structural improvement in the trading ecosystem”.

China factory activity returns to growth after record contraction

Beijing faces calls to increase stimulus and support lagging demand in world’s second-biggest economy

China’s factory activity returned to growth in December, snapping a record eight-month contraction as Beijing tries to spark optimism in the world’s second-biggest economy.

The official manufacturing purchasing managers’ index rose to 50.1 this month from 49.2 in November, according to the data released on Wednesday by the National Bureau of Statistics. The reading was also ahead of the 49.2 expected by analysts in separate polls by Bloomberg and Reuters.

The non-manufacturing PMI, which tracks construction and services, also swung back to growth in December, registering a reading of 50.2 following a three-year low of 49.5 a month earlier. A reading below 50 signals a contraction in activity.

Huo Lihui, a statistician at the NBS, said in a statement that the results showed “production and demand have both expanded significantly”.

But Julian Evans-Pritchard, head of China economics at Capital Economics, cautioned that the positive readings probably reflected a “shortlived upturn in activity” following an improvement in fiscal spending, rather than the start of a more sustained pick-up.

“The big picture is that the structural headwinds from the property downturn and industrial overcapacity are set to persist in 2026 and there appears to be limited appetite among policymakers for a big increase in demand-side stimulus,” he said.

While exports of low-cost and high-tech products have surged, China’s economy has been wracked by deflationary constraints, flagging domestic demand and falling investment. These have put pressure on Xi Jinping’s administration to find long-term drivers of strong growth to offset the years-long crisis in the debt-fuelled property sector.

Beijing has pledged to boost efforts to strengthen consumption, a persistent economic laggard, in the country of 1.4bn people. The National Development and Reform Commission, a top government economic planning agency, on Tuesday announced plans to sell its first Rmb62.5bn ($8.9bn) tranche of ultra long-term special government bonds to support its consumer goods trade-in scheme.

The trade-in scheme, now entering its third year, was launched in 2024 and expanded this year to combat lacklustre consumer confidence. The subsidies will continue to cover smartphones and other consumer electronics as well as offering discounts for electric vehicle purchases, highlighting Beijing’s emphasis on high-tech manufacturing sectors.

The 2026 scheme has been expanded to new “smart” products including watches, glasses and home appliances.

Xi this month urged officials to more urgently address the problem of insufficient domestic demand, which he said was an imperative for “economic stability and economic security”.

He also called on them to boost flailing investment after a shock decline reported in October, while at the same time urging more discipline to avoid over-investment and unsustainable competition in some manufacturing industries.    

Despite pressures from US President Donald Trump’s trade war and tensions with western trading partners, Xi’s administration has resisted calls to deploy broader consumer-focused stimulus and roll out sweeping social security reforms. Many economists believe bolder measures are needed to improve sentiment.

Beijing’s next five-year plan, which will take effect in March, highlighted the importance of boosting consumption but remained focused on stepping up high-tech manufacturing and improving “self reliance” in science and industry in the face of the long-term rivalry with the US.

Can a Madrid in flux balance traditional charm and new energy? 

The capital has recently become the most expensive city in Spain per square metre — and change is happening fast. Some are questioning if its identity is in jeopardy

“Justicia is like the West Village 20 years ago,” says investment consultant John Prunier, who moved to Madrid from New York with his wife Csilla and 12-year-old daughter just over a year ago. “We’d been to Barcelona, but instantly preferred the cultural ballast and more distinctively Spanish feel of Madrid.”  

Eschewing the American school for the British Runnymede College so their daughter could be among predominantly Spanish peers, the couple chose to buy in the barrio of Justicia because they felt it was more Spanish than “touristy” Salamanca, where they had first rented. “We have made lots of Spanish and Latin American friends,” says John. “We assumed good affordability on our US budget, but house prices have risen fast . . . and the Spanish have been dispossessed from barrios like Salamanca.”

Demographics and financial dynamics are rapidly changing in a capital city that for many years seemed to embody tradition: “Madrid de toda la vida.” Long undervalued by investors, it has recently overtaken the Basque resort of San Sebastián as the most expensive city in Spain per square metre, according to Tinsa, the valuation company. The average price of prime property in the third quarter of 2025 was €14,900 per sq m, up from €11,657 in the same period of 2020, according to Knight Frank — though still significantly less than London or New York. 

The question of how strongly the traditional ethos can prevail in some barrios in the face of shifting local populations and gentrification is a question on the lips of many. Can a Madrid in flux balance traditional charm and new money? 

“People are coming here for beautiful architecture, culture, the Madrid way of life,” says Ana White, of Knight Frank Madrid, who is currently helping a couple of C-suite clients with budgets of €10mn relocate from London. “Dubai is not for everyone.”

The city’s mix of stately buildings — neoclassical, baroque, beaux-arts — offer an understated refinement that also distinguishes its nightlife and myriad Michelin-starred restaurants. There’s a gentler energy in the city of world-class art institutions and serene parks than the avant-garde drama of Barcelona.

An added attraction for wealthy entrepreneurs and remote workers is the “Beckham Law” special expat tax regime that allows new arrivals in Spain to pay a flat tax rate of 24 per cent on Spanish-sourced income up to €600,000, instead of the higher progressive resident tax rates — for six years. 

As the economic hub of Europe’s fastest-growing major economy, the city’s population is increasing faster than Barcelona’s, according to INE, the national statistics office. Prestigious institutions such as IE University (which is expanding its campus) and its IE Business School are also helping to draw a steady stream of wealthy Latin American families, digital nomads and, increasingly, North Americans. The latter were the fastest-growing group of foreign buyers in Spain in the first quarter of last year, according to the Spanish Land Registrars, up 57 per cent year on year. They also lead foreign rental demand, according to Idealista.com. 

With a rise in population has come a rise in prices in the central districts that are the first stop for many wealthy arrivals. In the past five years, they have jumped 61.3 per cent in the leafy district of Ibiza, close to Retiro Park; 52.2 per cent in Jerónimos, another upscale district close to the park and the trio of art galleries; 35 per cent in the aristocratic embassy district of Almagro (Chamberí); 27.4 per cent in Justicia, according to Knight Frank. “Latin Americans love Salamanca, but North American buyers choose the authenticity of local life: Justicia, Cortes or Ópera,” adds Valeria Cimonetti of Driven Properties, an agent who also recently relocated a family from New York.   

Recoletos in Salamanca increased by a relatively modest 21.9 per cent in comparison — for some, this upscale district of graceful buildings next to Retiro Park, where apartments cost €16,000-€20,000 per sq m, has lost a little of its shine. “Extraordinary prices were being asked for very average properties [in Salamanca] so there’s some [price] adjustment due,” says Alex Vaughan, co-founder of agent Lucas Fox. 

Vaughan also emphasises that the Madrid market is still predominantly driven by Spanish buyers — foreigners comprised 14.6 per cent of the market between October 2024 and September 2025, according to the Spanish notaries association.

Still, developers are accelerating change to keep pace with international tastes. The Four Seasons Hotel kick-started a handful of branded residences in the city, including SLS Madrid Infantas, Banyan Tree Padilla and Mandarin Oriental.

A number of buildings with beautiful facades and wrought-iron balconies in the Cortes area, also known as the Barrio de las Letras (the city’s literary quarter), are being repurposed.  Casa Lamar, on Calle de Cedaceros, a narrow historic street, features 22 high-end residences with interiors by Patricia Urquiola, costing from €2.3mn. 

While some question if developments like these are a direct challenge to Madrid’s cultural integrity, Henri Hottinger, of Lamar Development, argues that they bring with them much-needed regeneration. Of Casa Lamar, he says it will be good to see this repurposed office building draw residents back to the area. The luxury heritage is there, with “historic businesses” such as Lhardy restaurant, opened in 1839, and Camisería Burgos, a tailor’s, operating since 1906,” he says — but it needs supporting. 

Not all of Madrid’s long-established businesses have survived recent challenges. Between 2020 and 2024, more than 7,000 neighbourhood shops in the Madrid region closed, according to INE. In some barrios, such as Lavapiés, Tetuán and Malasaña, it’s particularly painful to see.

The residential reimagining is also part of a wave of openings — new to town are The Hoxton, a branch of the east London hotel brand, a Nobu hotel and, from acclaimed local hospitality company Grupo Paraguas, a restaurant, boutique hotel and London-style members’ club in the striking Metropolis building.

Helen Wilkins first moved to Madrid from the UK in 2006 and can hardly recognise her old street in Tetuán. “There are skyscrapers and construction everywhere,” she says. “Old Spanish bars have been displaced by matcha places.” She was nevertheless drawn back to Madrid after a stint in Barcelona, and now rents a house in Carabanchel, a district outside the M-30 ring road close to Alkor College, her son’s school.  

“I love the sense of community in Madrid and how safe I feel compared to Barcelona,” says Wilkins, who set up Level Up Sports, a female-focused events company. But she is aghast at the rising cost of renting in the city. “It doesn’t help when digital nomads post on Facebook looking for a flat for ‘only’ €3,000 a month,” she says. In 2014, she paid €750 for a two-bedroom flat in Tetuán; now it costs €2,400. 

Many landlords have been shifting to contracts of less than 11 months to get around new rent controls on long-term lets, says Mari Cruz of rentals agency Peace of Mind. “They can increase the rent due to strong demand from digital nomads.” In the digital-nomad-popular area of Recoletos, two-bedroom, two-bathroom apartments typically cost €6,000-€7,000 per month, she says. 

Leah Pattem has lived in the district of Lavapiés for 12 years; on her website, Madrid No Frills, she blogs about the city’s policy of allowing “vulture capital funds” to acquire buildings, causing the eviction of tenants. “Lots of my friends are paying 50 per cent of their salary on rent or having to move out,” she says. “Gentrification is displacing the [local] people that make Madrid what it is.”

Some property investors may be on borrowed time, however; if Madrid introduces tax measures like those in Catalonia, it has the potential to become a less tempting place to invest. Catalonia’s new progressive rates of property transfer tax (Impuesto sobre Transmisiones Patrimoniales, or ITP) mean that property of more than €1.5mn is subject to 13 per cent purchase tax; there is also a new 20 per cent rate for large-scale investors. In the Madrid region, ITP is currently 6 per cent.  

“We see a lot of buyers from other Spanish cities such as Barcelona or Bilbao who see Madrid as a good investment,” says Yolanda Rueda Paneque, head of new developments at Savills Madrid. The extra taxes would make the market less attractive from an investment perspective by reducing expected returns, she says. She admits that it can be hard for a city in flux to keep its “unique” brand. “But Madrid has to change to keep up with other cities attracting the international market.”

Part of the city council’s rethinking of urban strategy is to increase the amount of housing and balance it with the new luxury projects, says Angela Baldellou, director-general of Madrid’s College of Architects. “It is a very big challenge. But Madrid has room to expand.” New housing projects include those in the district of Nuevo Norte in Chamartín and Valdecarros on the south-east fringe.

And while some wealthy residents seeking bigger homes near international schools are choosing to move out to affluent suburbs such as La Moraleja, Pozuelo or Boadilla, others have had their hand forced to move further out. 

After renting in Barrio de las Letras for 12 years, Madrid-born Jaime has bought a home in Adelfas, next to the M-30. “When I found myself living next to blocks of Airbnb flats, I decided to get out,” says the engineer, who prefers not to use his full name. “Traditional businesses will lose their local regulars who have to move out to suburbs. I like the fact that the city has more international faces, but it doesn’t feel like it belongs to us any more.”

Switch from defined benefit to defined contribution model aims to ensure long-term sustainability

The Netherlands is overhauling its €1.8tn pension system in a sweeping shift from guaranteed payouts to individual investment accounts, a change that could increase payments for up to 11mn savers according to its backers.

Funds with assets accounting for almost a third of the country’s pension system will switch in January from a defined benefit to a defined contribution system, where income fluctuates depending on the performance of the fund.

The transition follows more than 10 years of planning and is designed to make the Netherlands’ pension system sustainable for decades to come as its population ages.

“It’s a unique and profound transition,” said John Landman, chief executive of the country’s second-largest scheme, the Pension Fund for the Healthcare and Welfare sector (PFZW), which switches to the new system on January 1.

“We want the new pension plan to remain collective and include some level of solidarity, next to a more effective adaptation to volatility on the financial markets,” he added.

The transition comes as employers around the world have closed defined benefit pension schemes — where they bear the risk of making up shortfalls — in favour of defined contribution schemes, where individuals bear the brunt of the risk.

The new system includes a form of collectivity for most schemes, so that an individual’s pension assets are not automatically passed to beneficiaries when they die. The Dutch say this move allows for risk to be shared and lets the total pool of assets grow more and pay higher pensions.

“Collective investing helps to generate a high pension income for younger workers and a stable and predictable pension income for older generations and to create trust in the pension system,” said Annette Mosman, chief executive of APG, which manages the assets for ABP, the Netherlands’ largest pension fund.

The transition comes at a time when most Dutch schemes have a large surplus, meaning they have more assets than the amount they need to pay pensions. This allows them to increase current pension payments under the new system, which assigns all assets to the scheme’s members. 

PFZW, for example, is projecting a potential increase in payments of up to 7 per cent after the change is made, although the final figure will depend on its financial position at the time.

Other funds might expect to increase pensions by even more. According to consultancy Aon, the total funding level of the system was 128 per cent in October — meaning that assets were much higher than the amount needed to meet pension obligations.

Not all of the surplus will be passed through in higher pensions, however, as they keep a buffer to smooth pension payments should markets fall sharply. 

The transition is also expected to have a big impact on how Dutch pension funds invest, encouraging them to invest more in risky assets with higher expected returns, and less in debt, held to produce an income in line with pensions owed.

APG estimates the transition could lead to the €1.8tn system boosting investment in private equity and credit investments by about 5 percentage points — or €90bn — over the next five years. 

On the flip side, strategists at Dutch bank Rabobank expect €64bn of long-term sovereign debt will be sold over the course of the transition, which is expected to complete in 2028. 

The Dutch pension system has been the envy of Europe and was rated top in Mercer’s global pensions index this year, assessed across a range of measures including adequacy, sustainability and integrity. 

By 2024, a quarter of the country’s elderly population had a gross annual retirement income above €65,000. Just 4 per cent of pensioners are poor — mainly immigrants who have accrued fewer years of contributions, and the self-employed.

However, some pension experts are concerned that the move to the new system has been too complicated and could lead to errors in the account value that funds show their members. Data quality going back many decades is poor — particularly in sectors with many small businesses that were slow to move to computerised salary systems, such as hospitality.

“The chances of one or two or three of the funds experiencing a serious benefit calculation error are huge,” said Roland van den Brink, former president of the Dutch actuarial society who held senior positions at several big Dutch pension funds.

He added that the average employee and employer contribution into Dutch pension funds was about 25 per cent — much higher than comparable DC contribution rates in the UK or Australia.

Reductions in the contribution rates were “to be expected”, van den Brink said, given the trend of industries to move to the global average, leaving future pensioners “highly vulnerable to inflation”.

Total penalties imposed by financial watchdogs fell to $1.7bn in the year to December 19

US regulators collected 61 per cent less in fines for money laundering and sanctions breaches in 2025, after watchdogs took a more lenient approach under President Donald Trump.

Total fines imposed by the US for dirty money offences were just under $1.7bn in the year to December 19, a sharp drop from the $4.3bn in such penalties the previous year, according to data provided to the Financial Times by compliance software provider Fenergo.

Since Trump’s inauguration, he has ordered the top US financial watchdogs to take a more business-friendly approach. Since then, they have retreated from several investigations, including into crypto companies.

The drop in US penalties for breaches of sanctions, terrorism finance and anti-money laundering rules came despite a jump in such fines elsewhere in the world, suggesting Washington is pulling back from its role as the top policeman of the global financial system.

The countries with the biggest increases in such fines were France, Switzerland, the UK, Canada and the United Arab Emirates. However, they did not offset the US decline. Worldwide penalties in this area were down 19 per cent from the year before at $3.7bn.

“There has definitely been a decrease in the number and magnitude of AML-based enforcement actions in the US during the past year,” said Daniel Stipano, head of AML at US-based law firm Davis Polk and a former senior official at the Office of the Comptroller of the Currency, the US banking regulator.

“To a large extent I believe this has been policy-driven,” Stipano said, though he noted the 2024 figure was skewed by a single money-laundering case against Canada’s TD Bank, resulting in a $3bn penalty. In 2025, the largest single US penalty was a $511mn fine paid by Switzerland’s Credit Suisse for helping Americans hide billions of dollars from tax authorities.

Financial watchdogs often impose fines several years after opening initial investigations, so the recent decline in US enforcement penalties may reflect changes that happened before Trump took office at the beginning of 2025.

However, within days of becoming president, he ordered the Department of Justice to suspend enforcement of the Foreign Corrupt Practices Act, which prohibits bribery of foreign officials to win business.

The DoJ lifted the suspension in June but issued new guidelines to limit “undue burdens on American companies that operate abroad” and to focus on conduct that “directly undermines US national interests”.

The decline in US penalties could also stem from the impact of the government shutdown that began in October and closed some regulators for 43 days, as well as sweeping job cuts at many of the watchdogs under Trump, according to Rory Doyle, head of financial crime at Fenergo.

Doyle said Trump’s return to the White House appeared to have had a cooling effect on enforcement action against digital asset companies. “The embracing of the crypto sector by the new administration may have had an effect.”

Since January 2025, the US Securities and Exchange Commission has dropped a number of cases and investigations targeting cryptocurrency platforms, many of which donated to a fund for the president’s inauguration festivities.

“It is important to look at how many cases have been dropped by the SEC, DoJ and others since Trump came into office, which may have had an impact,” said Tom Keatinge, founding director of the Centre for Finance and Security at Rusi, a security think-tank.

Paul Atkins, who was appointed chair of the SEC by Trump, told the FT recently that the US markets watchdog had ditched the aggressive enforcement agenda it had under former president Joe Biden.

“You can’t just suddenly come and bash down their door and say ‘uh-uh we caught you, you’re doing something and it’s a technical violation’,” Atkins said, pledging to give businesses more notice of technical violations before taking formal enforcement action.