Ken Griffin’s Citadel Securities Has Some Tips for SEC

They’re making a list, and they want the SEC to check it twice.

On Wednesday, Ken Griffin’s Citadel Securities (the market-making firm, not to be confused with Griffin’s Citadel hedge fund, from which it was split off in the wake of the financial crisis) sent a list to the US Securities and Exchange Commission flagging what it sees as more than 30 different emerging risks facing the market.

Red Flags

There’s a new sheriff at the SEC. Out is Biden-picked Gary Gensler, frequent foe of Wall Street. And in, after being sworn in last week, is returning champion Paul Atkins, who previously chaired the agency from 2002 to 2008. Which means, according to Citadel’s letter to the agency seen by Bloomberg, that “now is the right time to comprehensively review the current regulatory framework and take decisive action to remove unnecessary costs and increase efficiency to unleash a new wave of innovation.”

Rest assured, Citadel Securities’ suggestions are comprehensive:

• Topping the list is a warning about the rise of 24-hour trading, just as the Nasdaq, New York Stock Exchange, and Cboe Global Markets all pursue SEC approval for round-the-clock operations. Citadel Securities, which claims to execute $570 billion in trades per day, says overnight trading requires more consistency across the industry and a clear regulatory framework.
• Citadel Securities also called for increased oversight of so-called Private Rooms, alternative trading systems in which only certain parties are allowed to execute transactions and whose operators “appear to be only providing minimal disclosures.”

Half Measures: And that’s not all. Citadel flagged all kinds of concerns about how Citadel credit, digital assets, and just about everything else gets regulated. It also pushed back against a new rule introduced last year that allowed thousands of stocks and ETFs to be priced by the half-penny. Instead, the half-penny implementation should first be tested over a two-year trial period, Citadel Securities wrote.