The Securities and Trade Fee at this time introduced that Citadel Securities LLC has agreed to pay $22.6 million to settle prices that its enterprise unit dealing with retail buyer orders from different brokerage companies made deceptive statements to them about the best way it priced trades.

The SEC’s order finds that Citadel Execution Providers instructed to its broker-dealer shoppers that upon receiving retail orders they forwarded from their very own clients, it both took the opposite facet of the commerce and supplied the very best worth that it noticed on numerous market knowledge feeds or sought to acquire that worth within the market.  The method of taking the opposite facet of the commerce of the retail orders is named “internalization.”

However the SEC’s order finds that two algorithms utilized by Citadel Securities didn’t internalize retail orders at the very best worth noticed nor sought to acquire the very best worth within the market.  These algorithms have been triggered once they recognized variations in the very best costs on market feeds, evaluating the SIP feeds to the direct feeds from exchanges.  One technique, often called FastFill, instantly internalized an order at a worth that was not the very best worth for the order that Citadel Securities noticed.  The opposite technique, often called SmartProvide, routed an order to the market that was not priced to acquire instantly the very best worth that Citadel Securities noticed. 

“Citadel Securities made deceptive statements suggesting that it could present or attempt to get the very best costs it noticed for retail orders routed by different broker-dealers,” stated Stephanie Avakian, Appearing Director of the SEC Enforcement Division.  “Internalizers can’t recommend they’re doing one factor but do one other in relation to pricing trades.”