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Here are the facts: - Ken Griffin owns 85% of Citadel - Citadel handles 40% of stock trades in the US - Citadel has $38 billion of assets under management as

by mbesto 5y ago

Here are the facts: - Ken Griffin owns 85% of Citadel - Citadel handles 40% of stock trades in the US - Citadel has $38 billion of assets under management as of March 2021 - On January 25, it was announced that Griffin's Citadel would invest $2 billion into Melvin Capital, which had suffered losses of more than 30% on account of its short positions, particularly on GameStop - On January 28, Robinhood, an electronic trading platform favored by many traders involved in buying GameStop stock and options, abruptly announced that it would halt all purchases of GameStop securities except to cover shorts and would only allow these securities to be sold if already held (but not sold short); the price of GME stock declined steeply shortly thereafter. This is not a silly assertion. EDIT: PS - I know US Senators can be silly, but here is the implication from a US Senator and former law professor: https://www.warren.senate.gov/imo/media/doc/02.16.2021%20Letter%20from%20Senator%20Warren%20to%20Mr.%20Griffin%20(Updated).pdf https://www.warren.senate.gov/imo/media/doc/02.16.2021%20Let...

tptacek 5y ago
It is entirely silly, as, for what it's worth, is Warren's letter. Virtu handles a comparable amount of stock trading in the US; maybe you think they can strong-arm Schwab, too? You can pretty easily pull up a list of firms ranked by their AUM to put that scary-sounding "$38 billion" in perspective, too.
- mbesto 5y ago
  You keep saying it's "silly" and provide no specifics (the one you did was incorrect) and keep saying things like "they aren't even that large" without provide comparable numbers. > maybe you think they can strong-arm Schwab, too? I never said that, did I? I think its well known that PFOF is a controversial business practice because it can create conflicts of interest. That's not a new thought.
  - tptacek 5y ago
    It's well known on message boards that it's controversial. It's a universal practice in the industry.
    - mbesto 5y ago
      So are S&P/Moody ratings yet those got us in trouble in 2008. Just because something is a universal practice in the financial industry doesn't absolve it from conflicts / potential legalities.
      - mbesto 5y ago
        PS - fun fact, PFOF was pioneered by Bernie Madoff https://archive.fortune.com/2009/04/24/news/newsmakers/madoff.fortune/index.htm https://archive.fortune.com/2009/04/24/news/newsmakers/madof...
        gruez 5y ago
        What's the point of this "fun fact"? I guess the implication you're trying to make is that PFOF is bad by association with maddoff. It's easy to see the flaw with this logic, eg. the autobahn was "pioneered" by hitler, therefore it's bad.
        mbesto 5y ago
        > I guess the implication you're trying to make is that PFOF is bad by association with maddoff. Read the full article and maybe you'll understand better? If you're lazy here ya go: > Call it shabby if you want. Payment for order flow was legal, and Madoff fought to keep it so. Under pressure from the SEC, the NASD, the securities industry's self-regulatory body, assembled a panel to study the issue in 1990. At the time, payment for order flow was highly controversial, and opposition was intense. I don't understand why you guys are so hand-wavy about the the idea that PFOF introduces serious conflicts of interest, when it's been debated for decades (with serious thought, not just some random internet trolls). A bunch of reddit/RH users talking about the issues with PFOF isn't new - that's my point. You seem to suggest that just because they are the ones bringing light to it that it shouldn't be taken seriously. Weird.
        gruez 5y ago
        >Read the full article and maybe you'll understand better? If you're lazy here ya go: Well you just casually linked a 11k word article with little context. I'm not going to read that and then try to figure out whether that article was supposed to serve as an addition to your original argument, or merely a source to back up your claim about PFOF being pioneered by maddoff. >At the time, payment for order flow was highly controversial, and opposition was intense. In other words, PFOF is bad because Madoff fought for it and it was controversial? That's still guilt by association, and a terrible argument. >I don't understand why you guys are so hand-wavy about the the idea that PFOF introduces serious conflicts of interest Because they're already obligated by law to provide best execution. They're also obligated to provide reports on the quality of execution. >You seem to suggest that just because they are the ones bringing light to it that it shouldn't be taken seriously. Weird. You started off by insinuating that robinhood took orders from melvin/citadel to restrict trades. Insofar as that's concerned, it shouldn't be taken seriously because there's scarce evidence.
kasey_junk 5y ago
I’ll note Elizabeth Warren has made it a particular point of her platform to beat on Wall Street. I largely don’t mind cause someone ought to. But she is far from an unbiased source.

by mbesto 5y ago

tptacek 5y ago

It is entirely silly, as, for what it's worth, is Warren's letter. Virtu handles a comparable amount of stock trading in the US; maybe you think they can strong-arm Schwab, too? You can pretty easily pull up a list of firms ranked by their AUM to put that scary-sounding "$38 billion" in perspective, too.

mbesto 5y ago
You keep saying it's "silly" and provide no specifics (the one you did was incorrect) and keep saying things like "they aren't even that large" without provide comparable numbers. > maybe you think they can strong-arm Schwab, too? I never said that, did I? I think its well known that PFOF is a controversial business practice because it can create conflicts of interest. That's not a new thought.
- tptacek 5y ago
  It's well known on message boards that it's controversial. It's a universal practice in the industry.
  - mbesto 5y ago
    So are S&P/Moody ratings yet those got us in trouble in 2008. Just because something is a universal practice in the financial industry doesn't absolve it from conflicts / potential legalities.
    - mbesto 5y ago
      PS - fun fact, PFOF was pioneered by Bernie Madoff https://archive.fortune.com/2009/04/24/news/newsmakers/madoff.fortune/index.htm https://archive.fortune.com/2009/04/24/news/newsmakers/madof...
      - gruez 5y ago
        What's the point of this "fun fact"? I guess the implication you're trying to make is that PFOF is bad by association with maddoff. It's easy to see the flaw with this logic, eg. the autobahn was "pioneered" by hitler, therefore it's bad.
        mbesto 5y ago
        > I guess the implication you're trying to make is that PFOF is bad by association with maddoff. Read the full article and maybe you'll understand better? If you're lazy here ya go: > Call it shabby if you want. Payment for order flow was legal, and Madoff fought to keep it so. Under pressure from the SEC, the NASD, the securities industry's self-regulatory body, assembled a panel to study the issue in 1990. At the time, payment for order flow was highly controversial, and opposition was intense. I don't understand why you guys are so hand-wavy about the the idea that PFOF introduces serious conflicts of interest, when it's been debated for decades (with serious thought, not just some random internet trolls). A bunch of reddit/RH users talking about the issues with PFOF isn't new - that's my point. You seem to suggest that just because they are the ones bringing light to it that it shouldn't be taken seriously. Weird.
        gruez 5y ago
        >Read the full article and maybe you'll understand better? If you're lazy here ya go: Well you just casually linked a 11k word article with little context. I'm not going to read that and then try to figure out whether that article was supposed to serve as an addition to your original argument, or merely a source to back up your claim about PFOF being pioneered by maddoff. >At the time, payment for order flow was highly controversial, and opposition was intense. In other words, PFOF is bad because Madoff fought for it and it was controversial? That's still guilt by association, and a terrible argument. >I don't understand why you guys are so hand-wavy about the the idea that PFOF introduces serious conflicts of interest Because they're already obligated by law to provide best execution. They're also obligated to provide reports on the quality of execution. >You seem to suggest that just because they are the ones bringing light to it that it shouldn't be taken seriously. Weird. You started off by insinuating that robinhood took orders from melvin/citadel to restrict trades. Insofar as that's concerned, it shouldn't be taken seriously because there's scarce evidence.

kasey_junk 5y ago

I’ll note Elizabeth Warren has made it a particular point of her platform to beat on Wall Street. I largely don’t mind cause someone ought to. But she is far from an unbiased source.