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Citadel invested in Melvin this week at a steep discount, they do not own the majority of Melvin (at least that hasn’t been publicly announced). Melvin announc

Citadel invested in Melvin this week at a steep discount, they do not own the majority of Melvin (at least that hasn’t been publicly announced). Melvin announced they had cleared their position in GME days ago so is unlikely to be the driver for brokerage behavior today. Citadel does not buy user data from Robinhood, they are one of Robinhood internalizers. They pay for the privilege of either trading against Robinhood based orders or routing them to an exchange. Not allowing buys can happen for a wide variety of reasons from technical, business to legal to counterparty demands and isn’t necessarily signs of collusion. That said there is certainly the appearance of a conflict of interest and I’m sure Robinhood will be addressing that in court and to investigators presently.

mcv 6y ago
It seems we're both right in a way. Cory Doctorow has a through explanation here: https://pluralistic.net/2021/01/28/payment-for-order-flow/#wallstreetbets https://pluralistic.net/2021/01/28/payment-for-order-flow/#w... > "Robinhood partners with institutional investors and lets them spy on what the average joes are buying and selling. Sometimes, this is just "market intelligence" ("Hey, people like fidget spinners") but the main event is front-running." > "If you're paying Robinhood to tell you what assets its customers are about to buy, you can go out and buy them up first and sell them for a profit to Robinhood's customers." > "Or you can buy some of that asset up because you know its price will go up once Robinhood's customers orders are filled." > "Citadel Securities is Robinhood's main institutional investor partner."
- kasey_junk 6y ago
  Cory Doctorows position is built on a flawed understanding of what payment for order flow is all about. Internalizers do not go out and buy the things they’ve peaked at during the internalization process.
jojobas 6y ago
The rumour is that Citadel renewed their shorts. https://twitter.com/justinkan/status/1354853920762253315?s=21 https://twitter.com/justinkan/status/1354853920762253315?s=2...

mcv 6y ago

It seems we're both right in a way. Cory Doctorow has a through explanation here: https://pluralistic.net/2021/01/28/payment-for-order-flow/#wallstreetbets https://pluralistic.net/2021/01/28/payment-for-order-flow/#w... > "Robinhood partners with institutional investors and lets them spy on what the average joes are buying and selling. Sometimes, this is just "market intelligence" ("Hey, people like fidget spinners") but the main event is front-running." > "If you're paying Robinhood to tell you what assets its customers are about to buy, you can go out and buy them up first and sell them for a profit to Robinhood's customers." > "Or you can buy some of that asset up because you know its price will go up once Robinhood's customers orders are filled." > "Citadel Securities is Robinhood's main institutional investor partner."

kasey_junk 6y ago
Cory Doctorows position is built on a flawed understanding of what payment for order flow is all about. Internalizers do not go out and buy the things they’ve peaked at during the internalization process.

jojobas 6y ago

The rumour is that Citadel renewed their shorts. https://twitter.com/justinkan/status/1354853920762253315?s=21 https://twitter.com/justinkan/status/1354853920762253315?s=2...