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...

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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

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.    

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.

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.

 

piceridu's picture

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

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

 

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?

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."

Stoploss's picture

One scapegoat indeed..

fonzannoon's picture

This is the firm the bernakyellen trades through, right?

RacerX's picture

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

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

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 ?

Soul Glow's picture

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

Squid Viscous's picture

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

Colonel Klink's picture

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

Downtoolong's picture

Citadel would like us all to stop pointing fingers at them

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

Guess which one.

BeetleBailey's picture

FUCK YOU CITADEL!

 

just-my-opinion's picture

Then why is my Butt so sore

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

 

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!

sgt_doom's picture

Point guns, not fingers and . . . .

Arclight Wall Street ! ! !

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!

Seer's picture

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

I am a Man I am Forty's picture

So much for supply and demand.

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-...

Soul Glow's picture

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

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.

fonzannoon's picture

whaddaya think Seer? 

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

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.

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.

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.

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.

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)

philosophers bone's picture

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

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.

Seer's picture

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

Up until the music stops...

Nana's picture

Cuntadel!!!!!!!!!

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.

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.

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.

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. 

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.

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.

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...

Colonel Klink's picture

Pure and simple Nazarali, you're a liar!

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

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.