S&P places Jump on watch

S&P said it placed its BB ratings for Jump Financial LLC and its senior secured debt on CreditWatch with negative implications.

“The CreditWatch placement reflects our expectation that Jump's expansion into slightly longer duration strategies will pressure our capital metrics. Since we initiated the rating on Jump in 2021, the company has expanded into longer-duration and more capital-intensive trading strategies in addition to shorter-term high-frequency market-making strategies. While these trading strategies have diversified Jump's net trading income and supported earnings growth, they have also grown its balance sheet and increased the amount of positions the company holds overnight and its exposure to trading risk,” S&P said in a statement.

Preliminary results reveal Jump’s risk-adjusted capital ratio could decline below the agency’s 10% threshold. S&P warned a one-notch downgrade is possible if the company is unable to demonstrate a path to a risk-adjusted capital ratio closer to 10%.

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