![]() ![]() Two firms dominate the arena of carrying out retail trades: Citadel Securities and KCG Holdings. In most cases, the firms pay retail brokers for the right to execute these customer trades in a widespread practice known as “payment for order flow.” It’s a system credited with lowering trading costs for mom-and-pop investors - but regulators wonder whether it’s ultimately in their best interest. Instead, electronic wholesale firms often end up carrying out those requests. She may think her trade heads directly to the New York Stock Exchange, but that’s rarely true. retail investor sends out an order to buy or sell a stock through a brokerage account. You can also follow me on Twitter, Instagram, Facebook, or LinkedIn for daily posts.A U.S. What are your thoughts on Citadel’s statements versus where the company stands today with the practice?Īlso Read: How Bloomberg’s Beloved Citadel Securities Manipulates the Market Market News Published Daily Market News Today: Citadel said payment for order flow creates conflicts of interest in 2004.įor more stock market, business news and updates, join the newsletterto receive weekly market news and notifications straight to your inbox.į is the media site that keeps retail investors informed. ![]() It looks like a lot has changed since 2004.Ĭitadel was able to identify how advantageous PFOF was and ultimately decided to weaponize it themselves. “We have been calling for a review of market structure for some time, but let’s be careful not to try to fix things that may not be broken,” he said. “The retail investor is getting a better deal than they ever have.” “You need to be very deliberate on that approach,” Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association (SIFMA) said. We look forward to reviewing the proposals and working with the SEC and the industry towards our longstanding objective of further improving competition and transparency.” “It is important to recognize that the current market structure has resulted in tighter spreads, greater transparency, and meaningfully reduced costs for retail investors. Citadel and Industry Push BackĪ spokesperson for Citadel Securities released the following statement to CNBC: “Redditors, thank you so much for helping create the best pipeline we’ve ever had”, said Ken Griffin on Business Insider. These statements come directly from Citadel in the filing.Īfter the GameStop and AMC incidents in 2021, retail investors urged the SEC to ban payment for order flow after discovering Robinhood reroutes retail orders to short-seller Citadel. Citadel against payment for order flow 2004.īroker dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers.” Practice distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers. “Citadel Group urges the Commission to ban payment for order flow. The SEC Chairman plans to reroute retail investors into an automated system that would provide a deep pool of liquidity. Gary Gensler said there may be a conflict of interest for brokers and that too much power is concentrated in a handful of market makers. Market News Today: Citadel said payment for order flow creates conflicts of interest.Ĭitadel pushed back on the possibility of a payment for order flow (PFOF) ban in June of 2022.īut Citadel said in 2004 that payment for order flow “creates conflicts of interest and should be banned”, according to an SEC file. ![]()
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