3 ms·

I definitely think I am under informed. Could you elaborate to help me understand?

astrange 6y ago
Robinhood uses a company named Citadel Securities for some order flow, which is a spinoff of the other Citadel, but is a separate LLC and doesn't care what the other one does. But it didn't matter even when they were the same company, because different departments of finance firms don't talk to each other by regulation ("Chinese walls").
- hayst4ck 6y ago
  As a skeptic, why should I believe the regulation is effective? (I am asking in good faith, not rhetorically) Wouldn't one Citadel entity affect the other? In 2008 didn't we learn that some companies are too big to fail (and therefore also too big to effectively regulate)?
  - astrange 6y ago
    > As a skeptic, why should I believe the regulation is effective? (I am asking in good faith, not rhetorically) It certainly isn't all the time. However, it does change over time and regulation right now is completely different from 2008 and a lot stricter. This situation where RH had to disable buys is actually caused by new regulations (some part of Dodd-Frank IIRC, and some private by DTCC but can't be arbitrarily changed) - as usual fighting the last battle causes new problems. > Wouldn't one Citadel entity affect the other? In 2008 didn't we learn that some companies are too big to fail (and therefore also too big to effectively regulate)? It's possible but their connection isn't that strong; we don't need to assume they'll affect each other just because they have the same name and some shared ownership. Their P&L isn't the same. Besides that, Citadel (the one loaning to Melvin) doesn't mind that Melvin lost a bunch of money, because it means they got to buy them at fire sale prices. As for "too big to fail" it seems like a meme that prevents actual analysis of the situation. Big companies are actually easier to regulate than lots of small ones, and treat their workers better since small ones are exempt from discrimination laws and often pretty abusive. (This is Matt Bruenig theory.)
    - deleted 6y ago
      [deleted]
    - deleted 6y ago
      [deleted]

Robinhood uses a company named Citadel Securities for some order flow, which is a spinoff of the other Citadel, but is a separate LLC and doesn't care what the other one does. But it didn't matter even when they were the same company, because different departments of finance firms don't talk to each other by regulation ("Chinese walls").

hayst4ck 6y ago
As a skeptic, why should I believe the regulation is effective? (I am asking in good faith, not rhetorically) Wouldn't one Citadel entity affect the other? In 2008 didn't we learn that some companies are too big to fail (and therefore also too big to effectively regulate)?
- astrange 6y ago
  > As a skeptic, why should I believe the regulation is effective? (I am asking in good faith, not rhetorically) It certainly isn't all the time. However, it does change over time and regulation right now is completely different from 2008 and a lot stricter. This situation where RH had to disable buys is actually caused by new regulations (some part of Dodd-Frank IIRC, and some private by DTCC but can't be arbitrarily changed) - as usual fighting the last battle causes new problems. > Wouldn't one Citadel entity affect the other? In 2008 didn't we learn that some companies are too big to fail (and therefore also too big to effectively regulate)? It's possible but their connection isn't that strong; we don't need to assume they'll affect each other just because they have the same name and some shared ownership. Their P&L isn't the same. Besides that, Citadel (the one loaning to Melvin) doesn't mind that Melvin lost a bunch of money, because it means they got to buy them at fire sale prices. As for "too big to fail" it seems like a meme that prevents actual analysis of the situation. Big companies are actually easier to regulate than lots of small ones, and treat their workers better since small ones are exempt from discrimination laws and often pretty abusive. (This is Matt Bruenig theory.)
  - deleted 6y ago
    [deleted]
  - deleted 6y ago
    [deleted]