Citadel Securities founder ‘quite fine’ with ending payment for order flow

Kenneth Griffin, the founding father of Citadel Securities, mentioned he could be “fairly positive” if fee for order stream was banned because the controversial follow comes underneath growing scrutiny from securities regulators.

“Cost for order stream is a value to me,” Griffin mentioned, addressing The Financial Membership of Chicago on Monday. “So if you happen to’re going to inform me that by regulatory fiat one in all my main gadgets of expense disappears, I’m OK with that.”

Cost for order stream is the controversial follow by brokers of promoting trades made on their platform to market makers akin to Citadel Securities. It’s profitable for retail brokers akin to Robinhood and Charles Schwab, which use the follow to offer zero-commission inventory and choices buying and selling to their prospects.

Within the yr to June 2021, Citadel Securities paid almost $1.5bn to brokers for his or her order stream, in response to regulatory filings collated by Bloomberg Intelligence, essentially the most of any market maker.

Cost for order stream got here underneath a harsh highlight initially of this yr when chaotic buying and selling by traders organised by Reddit’s r/WallStreetBets web page made many conscious of the function Citadel Securities performs in dealing with buying and selling volumes from retail brokerages.

Citadel Securities is the biggest US market maker, a enterprise that buys and sells securities and gives liquidity. It handles roughly 1 / 4 of all shares traded within the US, in response to the Chicago-based firm.

Workers on the US Securities and Trade Fee are engaged on new suggestions on fee for order stream. Gary Gensler, SEC chair, has mentioned that the follow “might current various conflicts of curiosity”, and has sought to research whether or not promoting retail trades delivers worth for retail prospects.

Talking on the SEC’s curiosity, Griffin mentioned that if fee for order stream “disappeared tomorrow” he was “fairly positive with that”.

“Having one in all my main value strains eradicated? I’m going to be a winner in that state of affairs,” he mentioned.

Griffin has been an outspoken defender of fee for order stream, saying that the follow’s function made buying and selling inexpensive for purchasers and was “good for everyone”.

He famous that whereas the rise of retail buying and selling “hasn’t all been good”, he warned that brokers would reintroduce commissions to prospects if fee for order stream was banned, which “could be an enormous loss”.

“Allow us to hope that in Washington we preserve the established order that brokerage companies have an obligation to safe the perfect execution they’ll for his or her prospects,” Griffin mentioned in his deal with. “That’s the foundation on which we compete, and that’s the premise on which we win.”

Individually, Griffin mentioned that Citadel Securities wouldn’t commerce cryptocurrencies due to uncertainty over how it could be regulated. He referred to as crypto “a jihadist name that ‘we don’t consider within the greenback’”.


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