5 ms·

There is zero conflict of interest between Robinhood and Citadel investment Group (the investor in Melvin), because they do no significant business together. R

There is zero conflict of interest between Robinhood and Citadel investment Group (the investor in Melvin), because they do no significant business together. Robinhood pays Citadel Securities for order flow, which is an entirely different company.

getToTheChopin 6y ago
Citadel Securities and Citadel Investment have the same owner -- Ken Griffin. https://en.wikipedia.org/wiki/Citadel_LLC https://en.wikipedia.org/wiki/Citadel_LLC
- valuearb 6y ago
  And you suppressed this information in your blog because ???
  - getToTheChopin 6y ago
    The article states: > Citadel is a hedge fund and market maker. Its success has vaulted founder Ken Griffin to a net worth of more than $20 billion. Technically, the two sides of Citadel (hedge fund / market maker) are split into two separate arms — but they are both under one parent company and owned by Ken Griffin.
    - valuearb 6y ago
      Ah you added this after the fact. I see you are scrambling to try to retain any credibility. You should be ashamed.
      - CivBase 6y ago
        What are you talking about? I read that in the article before I even made my post. Don't slander people with false accusations like that. EDIT: I even still had the browser tab open from when I first read it. I opened the page up in a new tab and ran a diff between them. There was no difference anywhere in the article.
        valuearb 6y ago
        I wrote one of the first comments about the article when it was first posted. I specifically noted the authors confusion on Citadel because the new language was not there.
        getToTheChopin 6y ago
        I went back in my revision history. Again for what it's worth (perhaps nothing), at 7:53AM ET this morning, I added this sentence: > Citadel is a hedge fund and market maker. Its success has vaulted founder Ken Griffin to a net worth of more than $20 billion. Technically, the two sides of Citadel (hedge fund / market maker) are split into two separate arms -- but they are both under one parent company and owned by Ken Griffin. This was posted on HN (again, not by me) after I added that sentence.
        valuearb 6y ago
        You added it only after I called you out here.
CivBase 6y ago
Citadel Securities is a subsidiary of Citadel LLC (aka Citadel Investment Group). If RH upsets Citadel LLC (the ones who invested in Melvin Capital), then you can be certain they will also upset Citadel Securities (the market maker who account for 45% of RH's PFOF revenue in Q3 2020). The conflict of interest looks pretty clear to me.
- valuearb 6y ago
  So if I understand this right, Robinhood destroyed their own reputation and greatly damaged their business, not because the DTCC increased collateral requirements 30x for GME and forced them to raise a billion dollars, but because an easily replaceable market maker asked them to?
  - CivBase 6y ago
    The destruction of RH's reputation is irrelevant. Thanks to the increased collateral requirements, They were facing liquidity issues and had to restrict buying of GME. There was no way around that. The problem is that they continued to allow customers to sell GME and lied about their rationale to their customers who could no longer buy it. If a large broker exclusively allows a stock to be sold, not bought, the trajectory of that stock's value will be pushed downward. It's in RH's interest to see GME go down (or at least go up slower). Lower prices mean less of a liquidity problem for them. It also really helps out their biggest market maker partner. It would not have been a conflict of interest if RH prevented customers from trading GME outright while they got their liquidity issue patched up. It would piss off potential sellers and, if the stock price went down, would result in objective losses for them which, IMO, RH should be liable for. That is a tough choice to make, but it would eliminate the conflict of interest. A stockbroker's value is in enabling customers to easily trade their stocks. If they cannot do that, they deserve damage to their reputation. If they cannot do that without engaging in conflicts of interest, they deserve to be investigated. Last week they failed on both fronts.
    - valuearb 6y ago
      So basically you agree that Robinhood stopped purchases of GME, despite the massive reputational risk it entailed, because they faced a very real risk of insolvency. Nearly destroying your firms Brand as a favor for an easily replaceable market maker doesn’t pass any rational test.

getToTheChopin 6y ago

Citadel Securities and Citadel Investment have the same owner -- Ken Griffin. https://en.wikipedia.org/wiki/Citadel_LLC https://en.wikipedia.org/wiki/Citadel_LLC

valuearb 6y ago
And you suppressed this information in your blog because ???
- getToTheChopin 6y ago
  The article states: > Citadel is a hedge fund and market maker. Its success has vaulted founder Ken Griffin to a net worth of more than $20 billion. Technically, the two sides of Citadel (hedge fund / market maker) are split into two separate arms — but they are both under one parent company and owned by Ken Griffin.
  - valuearb 6y ago
    Ah you added this after the fact. I see you are scrambling to try to retain any credibility. You should be ashamed.
    - CivBase 6y ago
      What are you talking about? I read that in the article before I even made my post. Don't slander people with false accusations like that. EDIT: I even still had the browser tab open from when I first read it. I opened the page up in a new tab and ran a diff between them. There was no difference anywhere in the article.
      - valuearb 6y ago
        I wrote one of the first comments about the article when it was first posted. I specifically noted the authors confusion on Citadel because the new language was not there.
        getToTheChopin 6y ago
        I went back in my revision history. Again for what it's worth (perhaps nothing), at 7:53AM ET this morning, I added this sentence: > Citadel is a hedge fund and market maker. Its success has vaulted founder Ken Griffin to a net worth of more than $20 billion. Technically, the two sides of Citadel (hedge fund / market maker) are split into two separate arms -- but they are both under one parent company and owned by Ken Griffin. This was posted on HN (again, not by me) after I added that sentence.
        valuearb 6y ago
        You added it only after I called you out here.

CivBase 6y ago

Citadel Securities is a subsidiary of Citadel LLC (aka Citadel Investment Group). If RH upsets Citadel LLC (the ones who invested in Melvin Capital), then you can be certain they will also upset Citadel Securities (the market maker who account for 45% of RH's PFOF revenue in Q3 2020). The conflict of interest looks pretty clear to me.

valuearb 6y ago
So if I understand this right, Robinhood destroyed their own reputation and greatly damaged their business, not because the DTCC increased collateral requirements 30x for GME and forced them to raise a billion dollars, but because an easily replaceable market maker asked them to?
- CivBase 6y ago
  The destruction of RH's reputation is irrelevant. Thanks to the increased collateral requirements, They were facing liquidity issues and had to restrict buying of GME. There was no way around that. The problem is that they continued to allow customers to sell GME and lied about their rationale to their customers who could no longer buy it. If a large broker exclusively allows a stock to be sold, not bought, the trajectory of that stock's value will be pushed downward. It's in RH's interest to see GME go down (or at least go up slower). Lower prices mean less of a liquidity problem for them. It also really helps out their biggest market maker partner. It would not have been a conflict of interest if RH prevented customers from trading GME outright while they got their liquidity issue patched up. It would piss off potential sellers and, if the stock price went down, would result in objective losses for them which, IMO, RH should be liable for. That is a tough choice to make, but it would eliminate the conflict of interest. A stockbroker's value is in enabling customers to easily trade their stocks. If they cannot do that, they deserve damage to their reputation. If they cannot do that without engaging in conflicts of interest, they deserve to be investigated. Last week they failed on both fronts.
  - valuearb 6y ago
    So basically you agree that Robinhood stopped purchases of GME, despite the massive reputational risk it entailed, because they faced a very real risk of insolvency. Nearly destroying your firms Brand as a favor for an easily replaceable market maker doesn’t pass any rational test.