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Robinhood sends their order flow to Citadel. Citadel would know before anybody else in the market that the massive number of buy orders from RH had just gone
by alasdair_ 6y ago
Robinhood sends their order flow to Citadel.
Citadel would know before anybody else in the market that the massive number of buy orders from RH had just gone to zero. They would also know that sell orders were still coming in.
This would allow Citadel to profit massively on the backs of the RH customers even if there was no direct collusion.
The thing is, RH isn’t stupid. They knew that Citadel (their biggest customer) would see that orders went to zero before anyone else and could move accordingly. RH didn’t need to explicitly warn Citadel in advance - the very nature of their relationship meant that they would be told in advance.
- tptacek 6y agoThis doesn't make much sense. One way Citadel could have known there was a massive number of buy orders would be to simply read WSB.
- alasdair_ 6y agoWSB didn’t know about RH buy orders going to zero for everyone until at least half an hour after it happened. Citadel knew before anyone else on the market and could act accordingly to short.
- kasey_junk 6y agoAnd what did Citadel do with that info? Citadel is one of several internalizers Robinhood uses. Each of them got the same data. They are all competitors. Can you explain the actual trade you are suggesting happened?