In the midst of this week's massive turmoil on Wall Street, JP Morgan decided it had had enough with senior executives exiting to join Citadel Investment Group. JP Morgan responded by halting trading with the hedge fund across stocks, bonds and foreign exchange.

Starting earlier this year, a number of JP Morgan execs began moving over to Citadel. This included Derek Kaufman, who joined as senior managing director and head of the U.S. fixed income business; Bill King, who joined as senior managing director and head of securitized products; and Patrik Edsparr who became CEO for Citadel Europe and head of global fixed income. "It's a strong action for JP Morgan to get to the point where this ban gets out in the market," says Denise Valentine, senior analyst at Aite Group. "It's a dramatic statement about both firms, especially when tensions are high across the board right now."

She says that this type of trading ban is "something that just isn't done" and is a "stain" on both firms. JP Morgan reportedly is still acting as a prime broker for Citadel despite the trading ban.

"Citadel has been very successful in the past year and a half moving into new markets and product areas," Valentine. "When you are successful as a hedge fund and you're rapidly expanding you obviously need new people and you get competitors unnerved when you move into their territory."

She adds that as a smaller firm, Citadel is more agile and can move quicker into new markets and product areas. And of course, moving around on Wall Street in groups is nothing new and it often happens. "But it's possible that the way in which they do it may bother people," says Valentine.

Of note, Citadel also hired two former Merrill Lynch executives earlier this week to head up its international distribution and marketing efforts.