Citadel's Griffin details firm's role in trading during GameStop rally

Citadel Income Fund

18/02/2021 24:12

By Svea Herbst-Bayliss
    Feb 17 (Reuters) - Electronic trading firm Citadel
Securities last month played a critical role in processing
retail investors' orders and was not involved in online trading
app Robinhood's decision to limit trading in GameStop, Citadel's
founder Kenneth Griffin said.
    Griffin, who has been trading stocks for more than half his
life, also laid out his ideas for improving trading for all,
suggesting shorter settlement cycles and transparent capital
models could be introduced now.
    The 52-year old billionaire investor, who founded hedge fund
Citadel LLC in 1990 and co-founded Citadel Securities in 2002,
will deliver prepared remarks and answer questions for the U.S.
House of Representatives' Committee on Financial Services on
Thursday, giving his most detailed public description yet of
events that unnerved markets for days in January.
    "When others were unable or unwilling to handle the heavy
volumes, Citadel Securities stepped up," Griffin said,
describing the frenzied retail stock trading when Citadel
Securities processed 7.4 billion shares for retail investors on
Jan. 27.  "That day Citadel Securities executed more shares for
retail investors than the average daily volume of the entire
U.S. equities market in 2019," he said.
    Citadel Securities, led by Peng Zhao, competes with other
market makers for order flow from companies like Robinhood and
receives a large percentage of orders based on execution
quality. It also pays Robinhood to process orders it receives.
    Retail investors have benefited from technology that
companies like Citadel Securities are employing to speed trading
and help cut fees, Griffin said. But last month's events -- when
an army of retail investors sent up the stock prices of unloved
companies like GameStop -- illustrate that more work is needed.
    Trades should be settled faster, Griffin said noting that
the trade date now usually takes two business days to settle. 
    "Individual investors are better served by America’s markets
than ever before, and it is critical that our markets continue
to be a force for fairness and integrity worthy of investor
confidence and participation," Griffin said.

 (Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))