Citadel Securities: Computers, stock market managers

Trading platform Citadel Securities quietly became one of the biggest forces in the US stock market.

Citadel Securities: Computers, stock market managers

From the 35th floor of an office building in downtown Chicago Citadel enters into one share transaction in the United States for every eight. She trades approximately 900 millions of lots of shares per day. More promotions go through Citadel systems, than through the New York Stock Exchange (New York Stock Exchange, NYSE), which trades approximately 700 millions of lots of shares per day.

If you own a retirement account or have ever used the services of an online broker, then your trades almost certainly went through Citadel.

The most striking fact about the floor of the exchange is, how eerily quiet he looks.

The trading floor is "run" by approximately 40 human, but they only watch computers, which use algorithms to fill in and send exchange orders.

Welcome to the new world of trading: high-speed computer programs are increasingly replacing thousands of brokers, who once ran around the NYSE trading floor and screamed.

Brokers Citadel "trading floor" run a little. They sit at computer terminals, clicking on the keyboard, чтобы удостовериться, that computers are working correctly and connected to the correct exchanges.

In fact, Citadel's own computer programs have become new eyes, the ears and brains of the US stock market.

About 20 programmers create computer algorithms, who decide, how to execute each request, and what to send to open exchanges or so called hidden pools (dark pool).

Hidden pools may sound like the dens of Star Wars villains, but they are just playgrounds, where sellers and buyers can make deals, not disclosing them to open markets. Citadel operates a hidden pool called Apogee from its New York office. (Apogee).

  Investments. Events of the week (№6)

Citadel programmers are constantly making changes, because computers "learn" consumer behavior, to make the process more efficient.

"All decisions are made by computers" – Jamil Nazrali, Citadel's head of electronic performance, told CNNMoney (Jamil Nazarali) on an exceptional backstage tour. “People here do not make decisions about whether, should the application be completed, and at what price. This is all done automatically. ".

Decisions are made in a split second: Citadel computers execute buy or sell orders almost instantly.

When Citadel computers fail to fill out an application internally, the deal goes to one of 13 open exchanges or one of more than 20 hidden pools.

Citadel is required by law to offer an appropriate or better price, чем та, which is on the open exchange, said Naserali.

But some industry observers are wondering if, Does Citadel's foresighted computer software always charge the best price.

Naserali claims, what is it: “As a market participant, I have a regulatory obligation to complete all client applications in my book before, how to trade yourself ".

He said, that Citadel systems actually create a fair playing field for high frequency and retail traders, who place orders through such brokers, как TD Ameritrade (AMTD), because they all have access to the same technology.

The main financial regulator FINRA (Financial Industry Regulatory Authority, Financial Institutions Regulatory Agency), recently asked some market participants and hidden pools to provide information about, how they fill out trade orders. Regulators worry, that on some trading floors high-frequency traders have an advantage over other investors. It is not clear, was Citadel a member of this group, FINRA declined to comment.


Trade is definitely accelerating, but it remains unclear whether this is better and cheaper for the average retail investor.

author: Maureen Farrell
A source: The computers that run the stock market

Scroll to Top