Citadel invested in Melvin this week on the cheap.
Citadel is the main internalizer for Robinhood.
I don’t think it changes much about your post but the connection between HFT and Melvin is public and directly financially relevant.
Citadel is the main internalizer for Robinhood.
I don’t think it changes much about your post but the connection between HFT and Melvin is public and directly financially relevant.
I would also be fairly surprised if Citadel made, say, 1000% ROI on their total GME trades this week. Giant bull runs are fine for HFT, sure; everyone wins when stonks go up (except for shorts, who lose big time). But giant bull runs are generally better for buy-and-hold investors than for HFT, because the buy-and-hold investors weren't doing all the useless intermediate buying and selling that the HFTs were. If a stock goes up and to the right, the best (retrospective) move is to have invested all of your position early, not to have constantly invested a bit of it over time as it went up like HFTs do. Basically: GME's performance favored avid WSB investors who got in early, much more than it favored HFTs front-running Robinhood for pennies on every trade. To quote Matt Levine, "you don't need special evil HFT powers to see" GME going up, it was happening for weeks [1]. You didn't need HFT powers to see WSB posts about the squeeze, or about short interest being 130% of the float. If you were an avid WSB user, and you got in early, you really did take Melvin for a ride. Sure, Citadel did well too — but your returns would still probably blow theirs out of the water.
IMO, WSB won the biggest.
(I do worry about the retail traders who bought in late due to the hype; this rally doesn't seem sustainable.)
1: https://twitter.com/matt_levine/status/1354131836323196928