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Kenneth Griffin, the founding father of Citadel Securities, stated he can be “fairly effective” if fee for order circulation was banned because the controversial apply comes underneath rising scrutiny from securities regulators.
“Cost for order circulation is a value to me,” Griffin stated, addressing The Financial Membership of Chicago on Monday. “So in the event you’re going to inform me that by regulatory fiat considered one of my main objects of expense disappears, I’m OK with that.”
Cost for order circulation is the controversial apply by brokers of promoting trades made on their platform to market makers similar to Citadel Securities. It’s profitable for retail brokers similar to Robinhood and Charles Schwab, which use the apply to supply 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 circulation, in response to regulatory filings collated by Bloomberg Intelligence, essentially the most of any market maker.
Cost for order circulation got here underneath a harsh highlight in the beginning of this yr when chaotic buying and selling by buyers organised by Reddit’s r/WallStreetBets web page made many conscious of the position Citadel Securities performs in dealing with buying and selling volumes from retail brokerages.
Citadel Securities is the most important 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 response to the Chicago-based firm.
Workers on the US Securities and Alternate Fee are engaged on new suggestions on fee for order circulation. Gary Gensler, SEC chair, has stated that the apply “might current quite a few conflicts of curiosity”, and has sought to analyze whether or not promoting retail trades delivers worth for retail prospects.
Talking on the SEC’s curiosity, Griffin stated that if fee for order circulation “disappeared tomorrow” he was “fairly effective with that”.
“Having considered one of my main price traces 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 circulation, saying that the apply’s position made buying and selling cheaper 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 circulation 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 one of the best execution they’ll for his or her prospects,” Griffin stated in his tackle. “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 will be regulated. He referred to as crypto “a jihadist name that ‘we don’t imagine within the greenback’”.
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