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Trading firm DRW suffered steep losses in the first quarter on wrong-way power trades after a deep winter freeze in North America sent energy prices ricocheting.
The Chicago-based firm lost $176mn in the first three months of the year on an adjusted basis, according to people familiar with the matter. Revenue was $619mn compared with $646mn in the first quarter of 2025, people added.
DRW responded by reducing risk and parting ways with the head trader who led the US desk for power and natural gas after the “significant loss” from “an extreme market event”, a spokesperson for the firm said.
The surprise hit to earnings at veteran trader Don Wilson’s privately held firm points to the volatility in broader financial markets so far this year. The Iran war has set off turbulence in prices of oil and government bonds while the advance of AI has sent valuations of related businesses soaring in equities markets.
DRW’s losses were driven by an outsized move in power prices after a spell of colder weather in the US in February. The firm had placed a complicated trade involving financial contracts on power transmission capacity, which fell apart after the market moved against its position, according to people familiar with the matter.
Several “pods” of traders at multi-strategy hedge funds were also blindsided by the moves in natural gas and power, market participants told the FT.
“A lot of people got sucked into that vortex,” said Robert Yawger, a commodity specialist at Mizuho Securities.
For other trading outfits, the wider volatility in markets has been a boon, driving record revenues. Jane Street, Hudson River Trading and Citadel Securities raked in a combined $27bn in trading revenue in the first quarter with Jane Street’s $16bn in revenues beating big banks JPMorgan and Goldman Sachs in the same period.
Founded in 1992, DRW has more than 2,000 staff and trades across bonds, commodities, equities, derivatives and cryptocurrencies.
Additional reporting from Michelle Chan, Eric Platt and Kate Duguid
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