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Does Citadel use this data for anything besides HFT front running? For example, I would think not just knowing price and volume or a stock but knowing who exact
by babyshake 6y ago
Does Citadel use this data for anything besides HFT front running? For example, I would think not just knowing price and volume or a stock but knowing who exactly is buying it and in what quantities would end up being a far more valuable source of alpha. I'd love to learn more about the potential techniques they are using.
- wocram 6y agoThey are not allowed to use it for very much at all, but Citadel has regularly been fined for breaking rules.
- mason55 6y agoIt’s not front running. It’s reducing the chance of adverse selection in market making. Front running is highly illegal.
- PaulHoule 6y agoCitadel gets first dibs on trades from Robinhood users. If they want the trade they take it, otherwise they send it on to some place else. Fidelity does this also and runs ads on TV that explain the trading process that are factually correct if not clear on why exactly the HFT is paying for order flow. Basically the HFT is "making the market"; somebody wants to buy 5 shares of this stock, a moment later somebody wants to sell 6, the HFT is a buffer between all of those people. With exclusive order flow from Robinhood, Fidelity or somebody like that they have a big pool of liquidity if all of a sudden their trading strategy says they should buy or sell that.
- ummonk 6y agoFidelity is explicit that it does not take payment for order flow.
- kchr 6y agoNot a user of RH, but I cannot imagine they aren't gathering these kind of analytics on their users as well as the order flow data.