Citadel’s Complaints Reveal Fears Of Being Beaten At Their Own Game

If irony could be monetized, Citadel Securities would already be trading it.

In a 29-page letter to the SEC, Ken Griffin’s market-making behemoth raised alarm bells over the rise of “private rooms,” opaque trading venues where only select parties are allowed to transact, and the advent of 24-hour markets. It also took aim at the SEC’s decision to permit half-penny pricing increments, arguing such changes should be “tested” before being implemented. Coming from a firm that has profited handsomely for years from practices that have undermined transparency and pushed retail trading off public exchanges, this sudden call for clarity and caution reads as disingenuous.

Let’s not forget: Citadel has long been one of the primary architects of the market’s off-exchange shift. The firm is a key beneficiary, and arguably the biggest driver, of “payment for order flow” (PFOF), the controversial system where retail brokers like Robinhood sell customer orders to wholesale firms like Citadel for execution. On the surface, it looks like a win for investors (zero-commission trading!), but in reality, it funnels enormous profits to firms like Citadel by routing trades away from public exchanges and into opaque internal systems.

Trading off-exchange widens the visible bid-ask spread, which sets the standard for best execution, and so results in inferior executions for retail customers. They may trade for free, but at the cost of worse-priced overall fills.

This arrangement has contributed to the concentration of power in the hands of a few dominant players. Citadel alone handles nearly a quarter of U.S. stock trading, while Jane Street also accounts for double-digit market share with equally aggressive algorithmic tactics. These so-called “New Titans of Wall Street,” as the Financial Times recently dubbed them, thrive in environments where human traders can’t compete; where speed, secrecy, and sophisticated code matter more than transparent price discovery or capital allocation.

So, when Citadel suddenly starts warning about a lack of transparency in private trading rooms, one has to ask, “What changed?” The answer is simple: They’re not in control of these new dark venues. Private rooms are just the next evolution of the very off-exchange ecosystem Citadel helped create. But because they threaten Citadel’s market dominance, now they’re a “risk.”

The same logic applies to their complaint about 24-hour trading. It seems that Citadel doesn’t mind a fragmented, opaque market, so long as they set the rules and dominate the flow. But if someone else might out-compute them during an overnight session or in an arena they don’t yet control? Suddenly, the SEC needs to step in.

Perhaps the most dumbfounding part of this letter is the complaint about tick size changes. In September 2024, the SEC approved a long-debated rule to allow certain stocks and ETFs to be quoted in half-penny increments. Ken Griffin himself publicly advocated for reforms to U.S. equity market structures, including support for measures that promote tighter spreads, in testimony before Congress. Now that it’s law and threatens Citadel’s ability to exploit wider spreads, the firm wants it dialed back and watered down through a slow “pilot program.”

The bigger picture here is clear: Citadel’s cries for reform are not about fairness or transparency. They’re about protecting their turf. For years, they’ve built a market structure in which they could internalize flow, avoid public scrutiny, and make billions from split-second advantages and privileged access. Now that other firms and technologies are disrupting that dominance, Citadel wants to cry foul.

But here’s the truth: If the market is starting to eat Citadel’s lunch, it’s only because the market learned how from watching them.

The real risk to markets isn’t the existence of new venues or trading hours, it’s that too much of our public equity trading has already disappeared from public view. It’s that price discovery is happening behind closed doors, among a shrinking club of elite, secretive firms. It’s that we’re mistaking gamification for democratization, luring millions of retail investors into a market rigged for machine-driven profit extraction.

I am not pining for a return to the old-school trading floors with their gatekeeping and insider handshakes. Those environments were hardly fair or inclusive. But what we have now—an algorithm-dominated, machine-speed market—is equally exclusive, just in a different way. Today’s market favors those who can afford the fastest code and the closest server to the exchange. And despite all the talk of democratization, it’s consolidating power and profits into the hands of a small, data-rich elite.

Real democratization isn’t about giving everyone access to a slot machine-style app. It’s about creating systems where human insight, judgment, and participation are valued alongside, rather than replaced by, technology. It’s about empowering talented individuals, providing them with tools, training, and opportunity to participate meaningfully in capital markets without needing to compete on microsecond latency.

We believe in a trading world where people, not just machines, matter. Where local knowledge, human perspective, and real-time decision-making play vital roles in balancing the high-frequency cacophony. This is not just idealism, it’s an investable, scalable vision that promotes market resilience, economic inclusivity, and broader participation.

If Citadel wants to complain about being edged out of the walled garden they helped build, fine. But let’s not forget: The future of trading shouldn’t belong to those who shout the loudest in Washington. It should belong to those who can build systems that are both technologically advanced and fundamentally human.