If you are a close observer of the financial markets and stock exchange then a name called Robinhood controversy is familiar to you. From the last couple of months, Ken Griffin, the CEO of Citadel company face some issues and controversies regarding his statement on GameStop and Robinhood congressional hearing.
But what actually happened and from where the whole controversy begins? If you want to know brief information about this then go through this article till the end. Here we are trying to cover the whole incident for you in simple words.
About the Whole Incident That Creates the Controversy
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In the previous year, Robinhood made a total profit of more than $221 million for order flow. And the best part is they just made it in the last quarter of the last year. The amount they made by following the method of “Payment for Order Flow”. It’s a great method where basically the market maker pays the brokerage for directing the orders to them.
By this method, most of the stock trading app works and in this way they make a huge profit by providing a zero brokerage rate to their customers. And here the Citadel securities works as a market maker. In a statement, the CEO of Citadel said that” Payment for order flow had been expressly approved by the SEC, it is a customary practice within the industry”.
What May Happened Next?
It’s very much sure that the statements of Ken Griffin create a lot of controversies and it may create to some extent problems for the company like GameStop and Robinhood. It’s very interesting to see in what direction the whole matter proceed.
But till then stay tuned with Stanford Arts Review for the latest updates.