XTX Posts Record Profits in 2025

Lead

XTX, the algorithmic market maker founded by Alex Gerko, reported its most profitable year on record for 2025, according to company filings and a Financial Times report dated Apr 3, 2026. FT coverage and Companies House filings indicate pre-tax profits of approximately £1.2bn for the year ended Dec 31, 2025, representing an ~85% increase versus 2024 (FT, Apr 3, 2026; Companies House, filed Apr 2026). The scale of those results places XTX among the most profitable private companies in the UK by absolute profit and profit margin. The drivers cited are elevated realized volatility across equities and FX, increased retail flow in derivatives, and expanded share of electronic market-making across major venues.

The consequence is a reshaped landscape for liquidity provision: exchange trading volumes and algorithmic quoting protocols benefited from a concentration of systematic firms that generate large, repeated micro-profits. While headline numbers show outsized profitability, the underlying data reflect narrower spreads captured at higher turnover rather than one-off directional bets. The FT article and associated accounts raise questions about market structure, competitive dynamics with incumbent banks and electronic brokers, and potential regulatory attention as exchanges and supervisors review concentration and model risk.

Context

The 2025 trading environment was characterized by episodic spikes in realized volatility and persistent cross-asset microstructure dislocations, conditions that favour systematic market makers with low-latency quoting capability. The Chicago Board Options Exchange's VIX averaged roughly 19 in 2025, up from about 14 in 2024 (CBOE data), translating into more profitable options market-making windows. FX realised volatility also rose for major pairs, with GBP/USD 30-day realised volatility up nearly 25% year-on-year in the second half of 2025 (LSEG aggregated data).

These structural moves came against a backdrop of declining returns for traditional market-making divisions at large banks, which faced higher regulatory capital and infrastructure costs. XTX and similar firms, using owned capital and central clearing economies, were able to scale quoting across venues more flexibly. The result was an accumulation of order flow share in spot equities, options, and FX markets during peak volatility periods—flow that generated high-frequency, low-latency revenue for systematic liquidity providers.

While systematic market makers benefited, the pattern of concentrated flow has macro implications for price discovery and resilience. When a few firms account for a large share of displayed liquidity, temporary shocks can cause disproportionate repricing if those firms widen or pull quotes. Regulators signalled awareness: the UK Financial Conduct Authority and other authorities have opened reviews of electronic market-making and the resilience of algorithmic quoting strategies (regulatory statements, 2025-26 review notes).

Data Deep Dive

The FT report on Apr 3, 2026, citing XTX accounts filed at Companies House, shows pre-tax profit of around £1.2bn for the year to Dec 31, 2025, with reported revenues of approximately £3.6bn (FT; Companies House, Apr 2026). That revenue-to-profit conversion implies an operating margin above 33%, well ahead of many listed brokers and comparable private market-making firms. Year-on-year profit growth of c.85% is notable relative to the broader sell-side, where many trading units reported declining returns for the same period (bank annual reports, 2025).

Transaction-level indicators support the accounts. Market data show average quoted spreads in US equities and major European stocks compressed by 15-25% intra-year but traded volumes rose 20-30% in the most volatile months of 2025 (exchange data, 2025). Narrow spreads combined with higher turnover magnify per-trade profitability for liquidity providers that consistently capture the bid-offer differential at scale. On the options side, realised implied volatility delivered larger premiums, increasing options market-making incomes by an estimated 40% in peak windows versus 2024 (exchange-clearing repositories, 2025).

Comparisons highlight scale: reported profitability for XTX in 2025 puts it ahead of many boutique brokers and rivals in absolute terms, and competitive with some listed market-making desks despite its private status. The firm’s operating leverage—technology and automation costs front-loaded, marginal costs low—facilitates disproportionate profit accrual when trading volumes spike. That dynamic also means profits are correlated strongly with market volatility metrics rather than pure asset price direction.

Sector Implications

The concentrated profitability of a handful of systematic market makers influences several corners of the financial ecosystem. First, exchange economics: venues that aggregate order flow and offer favourable maker-taker fees can see liquidity concentration increase market share for algorithmic firms. Second, broker-dealers: sell-side market-making desks face margin pressure and potential loss of flow as counterparties and venues route more business to lower-cost systematic providers.

Third, client execution quality and best execution regimes come into focus. Institutional clients evaluating venue and broker choice must weigh displayed spreads, execution certainty, and latency. Higher systemic share by firms like XTX can improve displayed liquidity in normal conditions, but may also concentrate execution risk in stressed periods. Finally, market design debates—tick size, minimum quoting obligations, maker-taker fee structures—are likely to intensify as exchanges and regulators seek to balance competitive pricing against resilience.

Risk Assessment

Concentration risk is the primary operational and systemic vulnerability. A modeled or real-world loss event that forces a major systematic firm to withdraw liquidity temporarily could widen spreads and reduce depth, impacting mid-market prices. Model risk is also elevated: strategies that depend on low-latency, continuous quoting are sensitive to tail events, microstructure regime shifts, and unexpected correlation breakdowns across assets.

Regulatory risk is non-trivial. Higher profits attract scrutiny; supervisors may require enhanced disclosure, capital buffers for algorithmic firms, or changes to venue rules that reduce profitability (FCA consultation notes, 2025-26). Competitive risk exists as well: outsized returns invite capital inflows and new entrants, which could compress spreads and reduce future margins. Finally, reputational risk tied to high profits and perceived information asymmetry can prompt political and client pressure for greater transparency.

Fazen Capital Perspective

Our assessment is that XTX's 2025 results are a structural symptom rather than an isolated outlier: elevated volatility, widened retail participation in derivatives, and venue fee structures have created a multi-year window of opportunity for scale-focused systematic market-makers. Contrarian implications deserve attention. One, outsized profitability will attract incremental capital and strategic partnerships that, over 12–24 months, will tend to compress margins as competition intensifies. Two, regulatory intervention—targeting either capital, disclosure, or quoting obligations—could be the largest single driver of forward profit normalization and may occur faster than the market currently prices.

We advise institutional clients to consider execution resiliency, not just immediate cost savings. The migration of flow toward algorithmic providers affects best execution calculus; firms should stress-test relationships and diversify routing to avoid one-way dependence. For market-structure researchers, the XTX case underscores the need to monitor venue fee incentives and the interaction of retail order flow with algorithmic liquidity providers. For further reading on market microstructure and execution strategy, see our insights on market structure topic and execution analytics topic.

Bottom Line

XTX's reported £1.2bn pre-tax profit for 2025 (FT, Apr 3, 2026) highlights a market-making model that benefits disproportionately from volatile, high-volume markets; that model is scalable but faces clear competitive and regulatory headwinds. Institutional participants should recalibrate execution risk and monitor regulatory developments closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.