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

Kenneth Griffin, the founding father of Citadel Securities, stated he can be “fairly high-quality” if fee for order move was banned because the controversial observe comes underneath growing scrutiny from securities regulators.

“Fee for order move is a price to me,” Griffin stated, addressing The Financial Membership of Chicago on Monday. “So for those who’re going to inform me that by regulatory fiat considered one of my main gadgets of expense disappears, I’m OK with that.”

Payment for order flow is the controversial observe 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 observe 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 move, in accordance with regulatory filings collated by Bloomberg Intelligence, essentially the most of any market maker.

Fee for order move got here underneath a harsh highlight firstly 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 supplies liquidity. It handles roughly 1 / 4 of all shares traded within the US, in accordance with the Chicago-based firm.

Workers on the US Securities and Alternate Fee are engaged on new suggestions on fee for order move. Gary Gensler, SEC chair, has stated that the observe “might current quite a lot of 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 stated that if fee for order move “disappeared tomorrow” he was “fairly high-quality with that”.

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

Griffin has been an outspoken defender of fee for order move, saying that the observe’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 move was banned, which “can be an enormous loss”.

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

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

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