This report does not constitute a rating action. Rated electronic market makers (EMMs) are on a hot streak. EMMs--proprietary trading firms that use advanced pricing and technology to trade large volumes of financial instruments electronically--have grown their business breadth and scope rapidly in the past five years. As a result, their profitability has significantly increased, and they now form an important pillar of financial markets. Firms'expansion has sharply increased the scope, level, and tail of their market risk exposure. Even so, extraordinary income growth has seen capital surplus keep pace at most firms, keeping risk-adjusted leverage in line with ratings. S&P Global Ratings views EMMs'growth as a delicate balance between the risk of executing and managing this expansion,
