Don’t Hate the Player, Hate the Game

No one hated Michael Jordan for mastering basketball, other than the teams he dominated. Citadel did something similar in market making. They figured out how to make money buying retail customer orders. In the process, they reduced trading costs for retail traders. They improved markets. But they made the cardinal sin of making too much money and once you do that, we have a tendency to believe you must be doing something nefarious; like how Air Jordan’s made Michael jump higher. Maybe instead of looking for what’s wrong with payment for order flow, we should be applauding how ingenuity is benefitting market participants. This and more on this week’s episode.