Citadel Securities, the electronic-trading firm owned by hedge-fund billionaire Ken Griffin, played a quiet but critical role in the frenetic trading stocks like GameStop.
Mr. Griffin, in prepared testimony, said he played no role in Robinhood’s controversial decision to curb trading in GameStop at the height of the stock’s rally. He also plans to defend the role of Citadel Securities in the GameStop episode. Citadel Securities executes many of the orders submitted by small investors using online brokerages like Robinhood and TD Ameritrade.
Like other high-speed trading firms, Citadel Securities pays the brokerages for the right to trade against their customers’ orders, a controversial practice that has drawn fresh scrutiny in the wake of the GameStop frenzy. Such payments are “a key reason why retail investors are able to trade for free or low commissions today,” Mr. Griffin said.
On Jan. 27, at the height of the GameStop rally, and a record day for overall stock-market trading volumes, Citadel Securities executed 7.4 billion shares’ of trades for retail investors, more than the average daily volume of the entire U.S. stock market in 2019, Mr. Griffin said, underscoring the firm’s huge role in the marketplace.
“During the period of frenzied retail equities trading, Citadel Securities was the only major market maker to provide continuous liquidity every minute of every trading day,” he added, referring to glitches that hit several rival high-speed trading firms on Jan. 27.