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.