This page has been archived and commenting is disabled.

Citadel Blasts Lewis' Flash Boys; Says "Small Investors Have Never Been So Fortunate"

Tyler Durden's picture




 

Citadel's head of Execution Services (cough HFT cough) Jamil Nazarali, proclaimed Monday that small investors have never been so fortunate and said, with regard to Michael Lewis' now infamous book Flash Boys, "The most important thing that the market can do is stop... pointing fingers at everyone else." Citadel, who allegedly provides the NY Fed's VIX trading capabilities, are among the very largest high-frequency traders in the market (and the most levered), so one would surely expect that Citadel would like us all to stop pointing fingers at them. As Bloomberg reports, Nazarali said yesterday during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California, "things are much better today than they were 10 to 15 years ago."

 

As a gentle reminder, Citadel is the most levered fund (as an HFT hiding in a hedge fund)...

 

 

So it is hardly surprising that the head of execution services - another name for High-Frequency-Trading - would come out swinging against Flash Boys...

As Bloomberg reports, Michael Lewis produced a top-selling book by arguing that the U.S. stock market is rigged. To one of hedge-fund operator Citadel LLC’s top executives, small investors have never been more fortunate.

“It’s one of the few markets in the world where the little guy gets a better deal than the big guy,” Jamil Nazarali, the head of Citadel Execution Services, said yesterday during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California. “Things are much better today than they were 10 to 15 years ago.”

Flash Boys specifically called out the likes of Citadel for the practice of paying for order flow...

Citadel’s role in that discussion stems from Nazarali’s unit, which pays brokerages including TD Ameritrade Holding Corp. for the right to execute orders placed by their customers, who tend to be individuals.

 

Lewis critiqued that practice, known as payment for order flow. Citadel’s rivals in that business include Citigroup Inc., UBS AG and KCG Holdings Inc. All are bound by rules meant to ensure they get the best price possible for investors.

 

Nazarali said yesterday that small investors often get better prices for their trades than the biggest firms.

Which is odd, as LiquidNet notes...

“If you are going to buy in bulk, you should get a better price than someone buying retail,” Liquidnet Chief Executive Officer Merrin said during a panel discussion with Nazarali. Giving the smallest investors a better deal than the biggest investors is “screwed up,” he said.

Merrin isn’t alone in arguing that large investors aren’t adequately served by the market’s current structure.

But Nazarali summed it up perfectly, when asked how to improve the perception among investors that the equity market is broken...

...more cohesion is needed...

 

“The most important thing that the market can do is stop the food fight where everyone is pointing fingers at everyone."

In other words... we need to stick together... stop pointing fingers at us because you know as well as us that if you bring us down, it won't end well.

We remain of the opinion that while HFT has gone off the headlines for the moment - and market rigging has been forgotten now we are rising again - that if and when the next big drop comes, there will be only one scapegoat...

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 04/29/2014 - 16:42 | 4709337 alphamentalist
alphamentalist's picture

...

Tue, 04/29/2014 - 16:46 | 4709349 Pladizow
Pladizow's picture

Citadel: Everyone needs to stop pointing their finger at us for stealing their money?

“Money power denounces, as public enemies, all who question its methods or throw light upon its crimes.” - Jennings Bryan

Tue, 04/29/2014 - 16:57 | 4709396 Xibalba
Xibalba's picture

Who said it was theft?  They're giving us their money every time the click 'buy'.  SEC says it's 'not illegal insider trading'...it's legal insider trading.    

Tue, 04/29/2014 - 17:06 | 4709433 knukles
knukles's picture

Jamal is lying.

Tue, 04/29/2014 - 17:19 | 4709478 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Screw Citadel.  I have had it happen to me.  It was only like 5 cents a share but it's bullshit, the quote didn't move yet I was charged more than the quote.  So I raise my middle finger to all of those bastards.

Tue, 04/29/2014 - 17:25 | 4709501 SilverIsKing
SilverIsKing's picture

That'll teach 'em.

Tue, 04/29/2014 - 17:45 | 4709525 Say What Again
Say What Again's picture

What a bunch of BS!!! 

I have the ability to route to Citadel Derivatives Group (CDRG) (allows for the trading of listed NYSE, AMEX, NYSE Arca, and Nasdaq stocks).  I can tell you that they are LYING!

I remember trying to trade years ago before I knew about this shit.  I didn't know how the ATS exposed my order (via a "Flash Order" to their "Liquidity Providers").  I couldn't understand why every time I placed an order at the Inside BBO, someone else would always be there a fraction of a second before me, and they would usually improve the BID / ASK by 0.0001 (Yes that's 1/100 of a penny!)  Bastards!!!!  I really began to wonder if there was a camera in my room, or maybe my computer was bugged.   I NEVER saw price improvement!!!

Eventually, I learned about "Flash Orders", and how I was getting screwed by these bastards.

I tried using pegged orders, but that was not very effective, as the robots would simply keep raising the BID, until they were 10 cents or more above where I started.  I eventually realized, that the most effective strategy was to BUY on the Offer, and SELL on the BID.  Since the spread is only a penny, that usually worked.  But even then there were problems.  If I was going for a 1000 or more shares, I would never get a complete fill, even when I made the aggressive move, so I then included a "discretionary" option to the order, allowing it to go a few pennies.  That worked 99.9% of the time.

The bottom line is this -- If you place an order at the inside BBO on CDRG -- place a BID to BUY or an OFFER to SELL, someone will be there in front of you by the time your screen refreshes, which is an eternity to a robot.  If you improve the BID / ASK, someone will still be there in front of you by the time your screen refreshes.

 

Tue, 04/29/2014 - 17:55 | 4709609 piceridu
piceridu's picture

https://www.youtube.com/watch?v=kFQJNeQDDHA

Great video that exposed these freaks in detail way before Lewis did...

 

Tue, 04/29/2014 - 18:36 | 4709719 sgt_doom
sgt_doom's picture

Guess those crooks over at Citidel (say, weren't they the ones constantly mentioned in the FOIA requests as to meeting with Timmy Geithner to decide on that global economic meltdown when Geithner was chair of FRBNY?) should read Jim McTague's book, Crapshoot Investing, huh?

Tue, 04/29/2014 - 17:38 | 4709556 Canadian Dirtlump
Canadian Dirtlump's picture

The concept that anything called "citadel" is noble and for the people is like expecting a comforting night's sleep at the "anal rape hotel."

Tue, 04/29/2014 - 16:44 | 4709348 Stoploss
Stoploss's picture

One scapegoat indeed..

Tue, 04/29/2014 - 16:45 | 4709354 fonzannoon
fonzannoon's picture

This is the firm the bernakyellen trades through, right?

Tue, 04/29/2014 - 16:47 | 4709359 RacerX
RacerX's picture

Right. Along with the Squid they are "doing God's work". Got it.

Tue, 04/29/2014 - 16:47 | 4709363 pods
pods's picture

Isn't that like a rapist telling the victim that it really isn't so bad?

These pukes' hubris cup runneth over.

pods

Tue, 04/29/2014 - 16:47 | 4709365 Rainman
Rainman's picture

Dumb ass Mr. Big should be ratting out the other guys first thus earning less time in the can. What kind of incompetent mob is this ?

Tue, 04/29/2014 - 16:54 | 4709391 Soul Glow
Soul Glow's picture

They all drank the Kool Aid, man.  They all drank the Kool Aid.

Tue, 04/29/2014 - 16:48 | 4709366 Squid Viscous
Squid Viscous's picture

Oh the wondrous things you can learn at the Milken Institute, all great for our society ...

Tue, 04/29/2014 - 17:07 | 4709439 Colonel Klink
Colonel Klink's picture

Hmmmm, Milken, what an appropriate name.  Just like Madeoff.  Milk'in the muppets before making off.

Tue, 04/29/2014 - 16:48 | 4709368 Downtoolong
Downtoolong's picture

Citadel would like us all to stop pointing fingers at them

OK. No fingers, just one finger then.....

Guess which one.

Tue, 04/29/2014 - 16:50 | 4709373 BeetleBailey
BeetleBailey's picture

FUCK YOU CITADEL!

 

Tue, 04/29/2014 - 16:51 | 4709374 just-my-opinion
just-my-opinion's picture

Then why is my Butt so sore

Tue, 04/29/2014 - 17:17 | 4709472 just-my-opinion
just-my-opinion's picture

sorry...I just wanted to see if I could up myself

I'll go back to jackin....the wife will never give you e-nuff

/sarc....man this world is f-ed up

 

Tue, 04/29/2014 - 16:52 | 4709383 Seer
Seer's picture

"The most important thing that the market can do is stop... pointing fingers at everyone else."

That's pretty much what I've been telling people.  Point those fucking fingers at THE SYSTEM!

Tue, 04/29/2014 - 18:37 | 4709725 sgt_doom
sgt_doom's picture

Point guns, not fingers and . . . .

Arclight Wall Street ! ! !

Tue, 04/29/2014 - 16:53 | 4709386 Soul Glow
Soul Glow's picture

Yeah and Bernanke just got paid $200k to give a speech where he said, "The Fed's policy helped Main Street as much as Wall Street."

Everytime you close your eyes - Lies!  Lies!

Tue, 04/29/2014 - 17:11 | 4709452 Seer
Seer's picture

Only big money is in lying and killing.  People seem more than willing to pay others to do it for them...

Tue, 04/29/2014 - 16:56 | 4709394 I am a Man I am...
I am a Man I am Forty's picture

So much for supply and demand.

Tue, 04/29/2014 - 16:58 | 4709400 fonzannoon
fonzannoon's picture

speaking of which...wtf?

" the silver market has been inundated with supplies of the metal. HSBC expects a 3.4% increase in the silver supply to 1.09 billion troy ounces in 2014, while demand will remain nearly unchanged at some 938 million ounce"

http://blogs.barrons.com/focusonfunds/2014/04/28/silver-the-worst-story-...

Tue, 04/29/2014 - 17:06 | 4709432 Soul Glow
Soul Glow's picture

They've been empying the bullion vaults for years.  It's likely soon to be all gone.

Tue, 04/29/2014 - 17:24 | 4709496 Seer
Seer's picture

Industrial use down?

It's one of the things I was cringing about when folks were pumping silver: industrial demand would drop when there's a big economic downturn.

Tue, 04/29/2014 - 17:30 | 4709528 fonzannoon
fonzannoon's picture

whaddaya think Seer? 

I can't make heads or tails of silver when it comes to actual supply.

Tue, 04/29/2014 - 18:10 | 4709650 Al Huxley
Al Huxley's picture

I think they're lying.  First, 'interest rates are going up'.  Really, WTF?  In who's dreams?  2nd, 'its highly profitable to produce because cost of production is 15 - 17'.  Really?  So why are all the silver miners sucking so badly, if they're so fucking profitable?  This sounds like the most blatant book-talking imaginable.  That said, in the short term, who knows?   But these are no-names quoted in the article, so they could be thrown under the bus without a second thought.  If it was Goldman, I could see there being a big break in the price over the near term, just to prove their omniscient power in the PM world, while they sucked up the physical supplies into private vaults at an obscene discount.

Tue, 04/29/2014 - 18:29 | 4709699 fonzannoon
fonzannoon's picture

I hear you Al. The only aspect about the article I care about is the actual supply produced vs demand out there.

Tue, 04/29/2014 - 18:51 | 4709773 Seer
Seer's picture

Al, again, what IF there's really not the demand from industry.  I guess I'd have to look and see what kinds of volumes industry is using (and the trend).  Would be interesting to see energy cost impacts on mining.  TPTB will just slosh crap around to shake us all out.

Wed, 04/30/2014 - 00:19 | 4710872 Al Huxley
Al Huxley's picture

That's the nice thing about physical metal - it's a pain in the ass to sell, and the spread makes it not worth the trouble, so its just insurance against bad surprises - fuck em. I'd love the price to go back to 10 - 15 /oz.

Tue, 04/29/2014 - 18:46 | 4709754 Seer
Seer's picture

fonz, I think that it's just best to go with your gut and ride long.  Silver is good, but don't expect to get "rich" (pretty much as with anything else).

Never, however, pass up good assets.  If you can get stuff that will work for you then do it.  Everything else is just, at best, a prayer at being a placeholder... (and, if one can at least stay in place then that beats the hell out of falling/dropping)

Tue, 04/29/2014 - 17:31 | 4709534 philosophers bone
philosophers bone's picture

And then you've got the Goldcore article just posted - "Silver - the World's Most Undervalued Asset"!!. 

Tue, 04/29/2014 - 16:58 | 4709397 Blame Crash
Blame Crash's picture

You can tell that he and his ilk feel completely safe in their underhanded shenagians. The pathetic part is that he's right. These conspirators can do anything and get away with it.

Tue, 04/29/2014 - 17:12 | 4709458 Seer
Seer's picture

"These conspirators can do anything and get away with it."

Up until the music stops...

Tue, 04/29/2014 - 17:00 | 4709406 Nana
Nana's picture

Cuntadel!!!!!!!!!

Tue, 04/29/2014 - 17:02 | 4709419 rlouis
rlouis's picture

10-15 years ago my annual stock trades were in the 00,000 shares and my schedule D was a pain. Now I watch and hardly trade at all.  I don't see that changing much either.

Tue, 04/29/2014 - 17:02 | 4709420 Bryan
Bryan's picture

The hubris is just phenomenal.  I guess all traders and investors 15+ years ago were just wading through the muck, trying unsuccessfully to squeeze their meager profits out of the dead market because there were no HFTs.  Sad, isn't it?  We are now so very grateful for their existence.  Them and the vampire squid have saved the muppets from mediocrity.

Tue, 04/29/2014 - 17:03 | 4709421 fishwharf
fishwharf's picture

I agree that we should stop pointing fingers at that prick.  Pointing something with a scope and magazine attched to it would be far more effective.

Tue, 04/29/2014 - 17:04 | 4709426 First There Is ...
First There Is A Mountain's picture

We deal with CDEL all day. These guys are some of the biggest fucking scumbags around. They'll take and clear paper from anyone and are known for being the pump and dumper's best friend. 

Tue, 04/29/2014 - 17:08 | 4709429 John McCloy
John McCloy's picture

 Oh..so.."Yes sir may we have another?"

  Thanks for clearing that all up. What is Citadel's connection to the FRBNY again and how is it legal for the FED to trade VIX let alone any other options or securities because then the real quesiton is...DOES ANYONE ELSE BELEIVE THAT THE FED IS NOT THE LARGEST OWNER OF SPY at this point? 

     We all knew that the deal was they trick Pres. into allowing them to buy ES Futures with our money in the hopes that decades from now they could sell for a profit..but what if that day never comes? Who is left with those loses since we all knew the economy would never recover? 

     Is that why we are seeing such desperation? And what if the 10 Year goes to 4% and the interest payments overtake any potential gains? Yup ...that is why we all know that this is going to end in tears because it is 6 years later nearly and we are almost there..get short or get broke.

Tue, 04/29/2014 - 17:10 | 4709446 knukles
knukles's picture

Pshaw... They're just rich... Enuf to make a whole bunch-a "campaign contributions"

Ya know, if a little green man from Mars came down here and looked at the arrangements, he'd say that from the donor's perspective, campaign contributions are bribes.  From the recipient's, extortion.
Pure clean and simple.

Tue, 04/29/2014 - 17:12 | 4709456 John McCloy
John McCloy's picture

 And this is a little refresher for anyone wondering when these criminals got the greenlight to do anything in their power to make the Narcissict in Chief look good and when he said it live on television:

http://www.usnews.com/news/obama/articles/2009/03/04/obama-says-buy-stoc...

Tue, 04/29/2014 - 17:06 | 4709435 Colonel Klink
Colonel Klink's picture

Pure and simple Nazarali, you're a liar!

Tue, 04/29/2014 - 17:14 | 4709459 Kavklov
Kavklov's picture

citadel ARE SCUM OF THE EARTH!!!

 

read the book  "the quants" this explain how they were created.. 

 

CITADEL = THIEVES IN WHITE COLAR

Tue, 04/29/2014 - 17:17 | 4709469 Al Huxley
Al Huxley's picture

Maybe instead of 'stopping the food fight where everybody is pointing fingers at everyone' they could improve their image by stopping with the lying and the cheating and the self-serving, disingenuous bullshit, and the ridiculous compensation and bonuses while the real economy collapses. 

 

Or Jamil and the could just shut the fuck up and accept the fact that being judged a bunch of gigantic self-serving cunts feeding parasitically off the wealth of the nation is a small price to pay for the personal financial benefit they're accruing. 

 

You lousy fucking douchebag - you're getting rich stealing from the majority of investors, and in addition to the financial benefit, you want a fucking 'attaboy' and a pat on the back?  Fuck yourself.

Tue, 04/29/2014 - 17:39 | 4709560 sleepingbeauty
sleepingbeauty's picture

Citadel is making an honest, impartial and very convincing argument about how investors are lucky to have HFT's front-running their bids. Honestly, doesn't everyone like when someone pays attention to them. And all these algo's are running around paying very close attention to our wants and needs. We should be thanking them!!!

 

/s

Tue, 04/29/2014 - 18:03 | 4709635 Arthur Schopenhauer
Arthur Schopenhauer's picture

Ocean Front Property - George Strait

http://youtu.be/QCvW32n4z38?t=38s

Tue, 04/29/2014 - 19:01 | 4709798 Seer
Seer's picture

Anyone want to gift them a box of nail guns?

Tue, 04/29/2014 - 19:28 | 4709891 Dre4dwolf
Dre4dwolf's picture

 

“If you are going to buy in bulk, you should get a better price than someone buying retail,” Liquidnet Chief Executive Officer Merrin said during a panel discussion with Nazarali. Giving the smallest investors a better deal than the biggest investors is “screwed up,” he said.

Merrin isn’t alone in arguing that large investors aren’t adequately served by the market’s current structure.

 

----------

That doesn't really work with stock markets IMO since you aren't really buying a comodity of any real value, and the stocks you are "buying in bulk" are not bought from a single person, but each share is bought and sold from many sellers and buyers, which means each trade is individually priced.

Using a computer to scalp multiple buyers and sellers by being soo fast to inherantly cause a puporseful delay between buyers and sellers should be criminal.

What if at the super market, I stopped you from buying your grocceries, bought all the grocceries in the store and then charged YOU MORE for those grocceries? would you be happy? NO, so why are you happy when that happens in the stock market?

 

Retail investors should be OUTRAGED at the very least IMO! HFT is just another bank run scam that they use to prop up their failing system, its a computerized trading scam system so that they can continue to suck the life out of hard-working americans trying to save for retirement.

There used to be a time, when you invested in the market BECAUSE YOU WANTED those stocks, now, no one wants them, they just want to handle the contracts flipping them back and forth so that they can scalp the little guy.

Tue, 04/29/2014 - 20:03 | 4710041 Notsobadwlad
Notsobadwlad's picture

The small investor has never been so fortunate AND THAT IS OF COURSE WHY SMALL INVESTORS ARE FLOCKING TO THE MARKETS (sarc off).

Small investors need to perceive the markets to be transparent, honest and free otherwise they know they markets are rigged ENTIRELY for the benefit of those who create and maintain the market systems.

I am sure that the apparently frontrunning, skimming and price fixing crooks at Citadel and on Wall Street in general believe that liquidity means everything to the small investor. Liquidity means very little to the small investor because the vast majority of small investors that "would" participate in the market if it was honest, are not traders. They are investors.

Tue, 04/29/2014 - 20:40 | 4710160 Notsobadwlad
Notsobadwlad's picture

By the way ... in a free market large buyers DO NOT generally get the best price because they must purchase from a wide variety of small sellers with a whole range of reserve prices to fill their single order.
However, when a bulk seller sells to a bulk buyer, they generally arrive at a lower price in the free market. The number of transaction in an "unautomated system", where the cost of a single transaction is not insignificant, can determine price because each transaction costs money.

However, in an automated system where computers agglomerate orders, the transaction cost is insignificant, there is no transactional justification for bulk buyers and small buyers to be treated differently. Sure, there are transactional costs to maintaining the automated system, but the marginal cost is insignificant.

I equate, what Citadel and all of the other Wall Street cons and apologists claim to be their justification for fraud and theft to be similar to someone saying that “you should be happy that they are f*cking your wife because she is happier”.

Wed, 04/30/2014 - 08:29 | 4711348 AdvancingTime
AdvancingTime's picture

To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong.

An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position. For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. More in the article below.

http://brucewilds.blogspot.com/2013/07/markets-more-lies-and-munipulatio...

Do NOT follow this link or you will be banned from the site!