Citadel tells key researchers to relocate from Hong Kong or quit
Hedge fund gives ultimatum to members of its global quantitative strategies team based in territory
Hedge fund giant Citadel has moved some of its core researchers out of Hong Kong, highlighting the pressures facing quantitative traders in the Chinese hub.
The $67bn US hedge fund told members of its Hong Kong-based global quantitative strategies team in recent months that they had to either relocate or leave the company, according to four people with knowledge of the matter.
Some affected researchers took the offer to relocate to Singapore or Miami, where Citadel is headquartered, while some left the fund, two of the people said.
Citadel’s global quant strategies team is crucial to the development of the hedge fund’s trading tactics. Three people familiar with the moves said they believed concerns over data security were part of the reason for relocating staff who are key to the fund’s intellectual property.
Citadel said the relocations were not related to data security concerns, and the fund continued to hire quantitative researchers in both Hong Kong and Singapore.
“This is Citadel’s global co-location strategy and has nothing to do with data security,” the hedge fund said, adding that it always tried to accommodate employees’ needs if they could not relocate.
Hong Kong remains Citadel’s largest office in the Asia Pacific region, where headcount has doubled from four years ago. “This story relies on incomplete facts from sources with limited knowledge,” it added.
Hong Kong has long established itself as a bridge between China and the rest of the world, and serves as the Asia headquarters for US financial institutions such as Goldman Sachs, Morgan Stanley and Jane Street.
The former British colony gained this position largely due to its independent regulatory regime and British common law heritage, which is increasingly being questioned by compliance at the US firms, now geopolitical concerns mount between the world’s two superpowers.
Hong Kong is viewed as increasingly on par with mainland China for US firms in terms of data compliance and intellectual property protection.
Apart from regulatory concerns, uncertain access to world-leading AI models also affects Hong Kong’s competitiveness as a financial hub especially for traders and analysts who rely heavily on such models to do their work in a competitive way. Quantitative strategists, for example, now increasingly use AI to code their trading algorithms.
Major US large language model providers such as Anthropic, Google and OpenAI have restricted direct access to their flagship models for users in Hong Kong, mainly due to concerns about data regulation, industry experts say.
Goldman Sachs stopped access to Anthropic’s Claude models earlier this year for bankers in Hong Kong, in another sign of how US-China tensions over data security are informing the location of technical employees of global financial institutions.
But such bans are subject to interpretation as some organisations continue to allow corporate access or access via a third-party provider to their Hong Kong-based employees.
Despite such uncertainty and geopolitical risks, some US institutions continue to expand their footprint in Hong Kong.
Jane Street, the New York-based trading firm, is taking up a new office space in Hong Kong’s harbourfront Central Yards that will occupy six floors and 223,000 square feet.
It is expanding because of its growing business in the region, especially in ETF trading in China, according to two people with knowledge of its plans. Jane Street did not respond to a request for comment.
Separately Citadel Securities, the market-making firm that also counts Ken Griffin as its founder, is looking to expand in China and has applied for a licence to establish fully owned operations onshore in mainland China.
If it were to obtain such a licence, the market-maker’s China operations would most likely be run locally and on systems built specially for the Chinese market, an industry norm, according to one of the people with knowledge of their plans.