Smart Bird: Do you wonder why Citadel pays your brokerage to execute trades instead of charging them?

Robinhood, E-Trade, TD Ameritrade, Charles Schwab, WeBull, Ally Invest Securities, First Trade, TradeStation and Fidelity all get paid to direct your orders to Citadel to execute trades according to the Marten’s 4 February article.

Amazing that Citadel’s owners wealth has climbed $8 billion dollars in only five years for all these free trades. What a guy.

And he donated almost a million dollars to speeches from our new Treasury Secretary Janet Yellen who will now be looking into what went wrong with Gamestop, Robinhood, and his company Citadel.

And as mentioned before, Janet Yellen’s neighbor and former Federal Reserve Chairman retired and got a nice cushy advisor job at Citadel after retiring from bailing out wall street with trillions and trillions.

Funny thing about Citadel. They keep getting caught and fined for trading violations year after year like “on July 16, 2020, Citadel Securities agreed to a $700,000 fine by FINRA for executing customer orders at prices worse than it traded for its own account.”

“its own account”

“its own account”

“its own account”

Yes, the market has been stable ever since 1999 when “the repeal of the Glass-Steagall Act which allowed giant federally-insured banks to merge with Wall Street’s casino trading firms for the first time since 1933.”

If Biden wants to “go big” he needs to bring back Glass-Steagall and now.

Read the Marten’s full article, Citadel Is Paying for Order Flow from Nine OnLine Brokerage Firms – Not Just Robinhood

If you think the SEC will be all over this and fix the markets, then you have not read the Marten’s SEC: 621,000 Shares in GameStop Trades Had Not Properly Settled by January 14 and you may not know the industry “self-regulates”. Ha, Ha, Ha!

…reflects the attitude of the Securities and Exchange Commission under the past two SEC Chairs, Mary Jo White and Jay Clayton, both of whom hailed from giant law firms representing the largest trading firms on Wall Street. The SEC had a front row seat at the serial crimes being committed by these firms; it monitored them in real time; and it did nothing to stop the serial crimes from reoccurring.

Yeah, the SEC was all over the naked short sales and “fails to deliver” of Gamestop the last two reports…

In a naked short sale, the broker handling the trade for the customer does not borrow or arrange to borrow the securities in time to deliver the shares to the buyer on the other side of the trade within the standard three-day settlement period. This is what is meant by Fails-to-Deliver, also known as simply “fails,” which can be a red flag of naked short-selling.

According to the latest Securities and Exchange Commission data for Fails-to-Deliver, GameStop has been experiencing huge fails to deliver since at least December 18, when an aggregate of 872,523 shares had failed to deliver on their settlement date. The figure of fails had been 10,874 just two days earlier, on December 16.

Oh by the way, from the first article we learned:

On February 28, 2020, Citadel Securities entered into a final agreement with the CBOE (which runs exchanges for options and futures) for selling a stock short while not actually borrowing the stock to sell short (in other words, entering into a naked short). Citadel Securities received a censure and a fine of $10,000.

So I can not wait to hear what comes out of Janet Yellen’s get-together with the regulators. I expect they will find some 18 year old trading in his parents basement to throw in jail this time… again.

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Categories: Perspectives