Ken Griffin denies Citadel works by using private info from retail investors

Citadel CEO Ken Griffin dismissed as “flat out wrong” the accusation that his firm improperly works by using info it garners from its marketplace-earning procedure.

Griffin spoke in an interview with CNBC on Friday, a single day just after Citadel and other market makers arrived underneath scrutiny from Congress about their position in very last month’s GameStop mania.

“I feel there is been a number of misperceptions about the info we get from the brokerage community. In truth, a popular U.S. senator asked us particularly about what personal identifying data do we obtain from retail investors. The reply is none,” Griffin explained to “Squawk Box” co-host Andrew Ross Sorkin.

Current market makers these types of as Citadel Securities spend e-brokers like Robinhood for the suitable to execute purchaser trades. The broker is then paid out a small payment by the sector makers for the shares that are routed, which can include up to thousands and thousands when buyers trade actively. Robinhood obtained far more than than $221 million in “payment for order movement” in the fourth quarter of 2020.

Nevertheless, industry makers have come beneath scrutiny, primarily in the context of the GameStop investing turmoil, about the information and facts they are able to garner from the flows of retail purchasers. In some situations, critics speculated how Citadel, which runs hedge fund and market-generating operations as separate organizations, could use that info.

“This conspiracy concept that we some how or a further are like some of the massive tech giants that have accessibility to personal figuring out details is just flat out wrong,” explained Griffin. “We have a cost, amount, a restrict. Which is what will come to us in an get from a retail broker.”

Citadel Securities executes approximately 40% of all retail quantity, Griffin told the Home Monetary Companies Committee on Thursday during the GameStop listening to.

“We get an purchase and as the bash that has to execute that order what we appear at at the second of receipt is what are the numerous selections that we have to accomplish the pretty greatest execution for that purchase,” mentioned Griffin. “We are not permitted to trade in entrance of that buy. Any execution that we can accomplish in the context of the industry for satisfying that get we should offer back to the retail investor, occasionally even with our pricing improvement that we insert on at the minute of execution.”

Griffin, along with the CEOs of Robinhood, Reddit and Melvin Money, were pressed by associates of the Dwelling committee on Thursday relating to final month’s epic limited squeeze in GameStop’s inventory.

The Citadel main defended a controversial strategy brokerages use to make funds, payment for buy circulation and said his business would adapt if new restrictions prohibited the exercise. Robinhood and other brokers count on “payment for get circulation” as their earnings engine in lieu of commissions.

Griffin was also pressed about the romance concerning Citadel Securities and Citadel the hedge fund, which injected $2 billion into Melvin Capital after the latter took big losses from shorting GameStop. Griffin consistently denied the organization had just about anything to do with Robinhood’s determination to limit buying and selling in GameStop. Robinhood has stated it did so in purchase to meet funds specifications from its trade clearing agency.

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