Both of these stories are narratives for our very own Hunger Games, a spectacle that chews up the participants in the arena while delivering enormous profits to the networks media, financial and political that put them on.
Media networks count their profits in eyeballs, in the attention the Games garner. Financial networks count their profits the old-fashioned way, in the sheer volume of dollar-generating order flow the Games produce. As for politicians, they get their most valuable coin of the modern realm — an issue.
The wackos on the left get to propose insane transaction taxes. The wackos on the right get to tell us how much liBeRtY we are enjoying by giving Ken Griffin all of our money. And what about the rest of us? Two moments that individually come around every 20 or 30 years. In one week. Goal 2: Both retail order flow and target stock volatility grew exponentially, creating windfall market maker profits. But accomplishing these goals came at a price. The curtain was pulled back on what Wall Street really is, and The Man behind the curtain was revealed for everyone to see.
We all saw that the thing that determines whether or not our stock market bets pay off is … other bets. This is Secret 1. We all saw that the dominant retail broker platform and non-dominant ones, too were told by trading settlement rules makers to shut it down for a day. No warning. No hearing or discussion. Just a phone call that they were on double secret probation and could either come up with billions of dollars in cash … NOW … or shut it down.
What happened last week with Robinhood would be exactly like if the referees who were working that Jets versus Patriots game — the one that the Jets were miraculously winning — decided at halftime that the Jets would not be allowed to have the ball on offense in the second half unless they ponied up a couple of billion dollars in an escrow account.
Insane, right? No, I want to focus on the equivalent of professional sports league referees, the top of the referee hierarchy, if you will. And who call the shots at the settlement clearinghouses, too, if you wanna know the truth. I want to focus on the people who adjudicate the bets and take a small fee from every transaction for their trouble. I want to focus on the market makers.
They did this without taking ANY market risk. Every time you push that button on Robinhood to buy something, Citadel Securities matches you with the seller and tells both of you what price you got.
Every time you push that button on Robinhood to sell something, Citadel Securities matches you with the buyer and tells both of you what price you got. And in that infinitesimal point in time when there is a tiny difference between what a buyer bids for a security and what a seller asks for a security, an infinitesimal point in time when Citadel Securities is BOTH buyer and seller of that security, an infinitesimal point in time that exists for EVERY market order that has ever occurred in the history of man … Citadel Securities is there.
They pocket that tiny difference. Not so tiny in the case of options. They literally make the market. And you are. Business is good. Everyone all of a sudden wants to download that Robinhood app and start trading. You may have noticed that there are a lot of media stories about that. Virtually all of the Robinhood orders go through Citadel Securities. Why them? Because they pay Robinhood top dollar for it.
Not by charging you a fee on your transactions, but by selling your Flow to Citadel Securities. When the product is free, yada yada yada. Apparently that first speech was so riveting that they needed two more. And you thought your ten-bagger in GME was a good investment. This is Secret 2. Is any of this stuff illegal? Probably not. I dunno. Sir, are your internal controls so poor and your understanding of markets so rudimentary that you found yourself in violation of capital posting requirements to such a degree that your only option was shutting down client trades OR did the National Securities Clearance Corporation NSCC raise their capital posting requirements to a shocking and unprecedented level without warning?
Now, the answer to at least one side of this question must be yes. Maybe the answer to both sides is yes.
But at least one MUST be. And if the answer to the latter side of the question is yes … well, then we need to ask the NSCC some questions.
Start with the people who were on the phone with Vlad. I bet he remembers their names. I can promise you his lawyers remember their names. Work backwards from there. How did this decision to give Gabe and Stevie and all the other HF titans on the wrong side of this ridiculous trade a day to trim their sails and throw their ballast overboard come about? How did this process begin?
Who made the first call? Who are the new participants in this financing, sir? Were the participants or the terms or any other aspect of this financing discussed alongside your negotiations with NSCC for permission to resume trading? And before you answer, sir, I would remind you that you are under oath. Honestly, though, the investigations and legal issues around last week are a sideshow. None of these post mortems are going to change Wall Street.
The time to take that action is NOW. Based on the young adult science fiction trilogy of books by Suzanne Collins, "The Hunger Games" introduces year-old Katniss Everdeen. The heroine lives in a post-apocalyptic world in the country of Panem where the United States once existed.
In Panem, a government working in a central city called the Capitol holds all of the power. The books follow Katniss, portrayed by Lawrence in the film, as she attends a nationally televised competition.
The Capitol selects one boy and one girl aged 12 to 18 from each of the 12 districts to participate in a battle to the death where only one survives: the winner. Free CP Newsletters Join over , others to get the top stories curated daily, plus special offers! Do you want award-winning journalism with a Christian worldview , delivered to your inbox?
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