Thieves gonna steal.
That is the answer.
What was the question? ;-)
28 Jan: Vice: Robinhood’s Customers Are Hedge Funds Like Citadel, Its Users Are the Product
by Edward Ongweso Jr
For the past few years, Robinhood has spent a great deal of energy marketing itself as born out of the Occupy Wall Street movement and champions a mission to “democratize finance for all.” The reality, however, is that this rhetoric distracts from the fact that it’s actually helping preserve the status quo—namely by turning its customers (but more so their orders) into products.
The secret to Robinhood’s success (and profitability) is simple: payment for order flow. To ensure trades are commission free, trades are sold to “market makers’’ or large firms such as Citadel Securities—Robinhood’s largest customer, which tried to bail out Melvin Capital after its Gamestop shorts cost it billions. Market makers execute those trades (sometimes at an inferior rate) and can use their privileged position to place themselves in the middle and make a profit. Crucially, in this arrangement, more trades and more volatility mean there’s more for firms like Citadel to work with. Here is the Financial Times explaining how it works...
Market makers like Citadel are supposed to be honest dealers that seek the best price for orders, whether they internalize the order themselves or send it to market. Unfortunately, Citadel has not always done this. In 2017, the SEC fined Citadel $22 million because its algorithms were screwing the retail investors whose order flows it was purchasing...
https://www.vice.com/en/article/qjpnz5/robinhoods-customers-are-hedge-funds-like-citadel-its-users-are-the-product
15 June 2020: Institutional Investor: Twitter Freaked Out Over Robinhood Selling Its Trade Flow. But the App — and Others — Have Been Doing It for Years.
#FinTwit wants a Robinhood takedown. This probably isn’t it.
By Alicia McElhaney
Zero Hedge also pointed out that Robinhood engages in a practice called payment-for-order-flow, sharing a tweet that showed “Robinhood’s financial arrangement with Citadel”...
https://www.institutionalinvestor.com/article/b1m2p1cv68bx56/Twitter-Freaked-Out-Over-Robinhood-Selling-Its-Trade-Flow-But-the-App-and-Others-Have-Been-Doing-It-for-Years