Thats not the way it works. Citadel Securities is a market maker. They don't "load up on shorts", they make both sides of a market. They tightly watch how big of a position they are allowed to take long or short as either could quickly bankrupt them. They make money by being delta neutral, avoiding directional risk, and selling in between the spread. They do all of this VERY automated so as to do it thousands of times per second. Citadel also has a hedge fund, that is a legally separated business that takes directional risk on stocks, usually through a combination of going long a stock they are seeing out perform and short a stock that they see to underperform relatively.
There is a Compliance team whose job it is to make sure they never talk or know anything about the other's business at the penalty of fines and jailtime. Citadel Securities and the Hedge Fund are strong competitors in the market. Breaking that arrangement and colluding would make Ken Griffen lose his Multi Billion dollar per year business and could land him in serious legal trouble. He's also a conservative, not that that means much these days.
Now, I think whats really happening is that the SEC is likely making veiled threats to the Broker Dealers about "risk tolerances" and some other bull shit. Smells to me like an SEC thing because it wasn't just Robinhood.
Thats not the way it works. Citadel Securities is a market maker. They don't "load up on shorts", they make both sides of a market. They tightly watch how big of a position they are allowed to take long or short as either could quickly bankrupt them. They make money by being delta neutral, avoiding directional risk, and selling in between the spread. They do all of this VERY automated so as to do it thousands of times per second. Citadel also has a hedge fund, that is a legally separated business that takes directional risk on stocks, usually through a combination of going long a stock they are seeing out perform and short a stock that they see to underperform relatively.
There is a Compliance team whose job it is to make sure they never talk or know anything about the other's business at the penalty of fines and jailtime. Citadel Securities and the Hedge Fund are strong competitors in the market. Breaking that arrangement and colluding would make Ken Griffen lose his Multi Billion dollar per year business and could land him in serious legal trouble. He's also a conservative, not that that means much these days.
Now, I think whats really happening is that the SEC is likely making veiled threats to the Broker Dealers about "risk tolerances" and some other bull shit. Smells to me like an SEC thing because it wasn't just Robinhood.