Griffin spoke in an interview with CNBC on Friday, someday after Citadel and different market makers got here below scrutiny from Congress about their position in final month’s GameStop mania.
“I feel there’s been quite a lot of misperceptions in regards to the knowledge we obtain from the brokerage neighborhood. In reality, a outstanding U.S. senator requested us particularly about what private figuring out info can we obtain from retail buyers. The reply is none,” Griffin advised “Squawk Field” co-host Andrew Ross Sorkin.
Market makers equivalent to Citadel Securities pay e-brokers like Robinhood for the fitting to execute buyer trades. The dealer is then paid a small price by the market makers for the shares which are routed, which may add as much as hundreds of thousands when clients commerce actively. Robinhood acquired greater than than $221 million in “fee for order move” within the fourth quarter of 2020.
Nevertheless, market makers have come below scrutiny, particularly within the context of the GameStop buying and selling turmoil, in regards to the info they’re able to garner from the flows of retail purchasers. In some instances, critics speculated how Citadel, which runs hedge fund and market-making operations as separate firms, may use that info.
“This conspiracy principle that we some how or one other are like a number of the huge tech giants which have entry to non-public figuring out info is simply flat out false,” mentioned Griffin. “We have now a value, amount, a restrict. That is what involves us in an order from a retail dealer.”
Citadel Securities executes roughly 40% of all retail quantity, Griffin advised the Home Monetary Providers Committee on Thursday throughout the GameStop listening to.
“We obtain an order and because the social gathering that has to execute that order what we have a look at for the time being of receipt is what are the assorted choices that we have now to attain the easiest execution for that order,” mentioned Griffin. “We aren’t permitted to commerce in entrance of that order. Any execution that we are able to obtain within the context of the marketplace for fulfilling that order we should present again to the retail investor, typically even with our pricing enchancment that we add on for the time being of execution.”
Griffin, together with the CEOs of Robinhood, Reddit and Melvin Capital, have been pressed by members of the Home committee on Thursday relating to final month’s epic quick squeeze in GameStop’s inventory.
The Citadel chief defended a controversial methodology brokerages use to make cash, fee for order move and mentioned his agency would adapt if new rules prohibited the observe. Robinhood and different brokers depend on “fee for order move” as their revenue engine in lieu of commissions.
Griffin was additionally pressed in regards to the relationship between Citadel Securities and Citadel the hedge fund, which injected $2 billion into Melvin Capital as soon as the latter took main losses from shorting GameStop. Griffin repeatedly denied the agency had something to do with Robinhood’s choice to limit buying and selling in GameStop. Robinhood has mentioned it did so with the intention to meet capital necessities from its commerce clearing agency.
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