The U.S. Securities and Exchange Commission (SEC) announced that Citadel Securities had settled charges of violating Regulation SHO, a law aimed at controlling short-selling practices. This violation pertained to Citadel Securities' alleged failure to accurately mark sale orders as long, short, or short exempt.

The SEC's investigation revealed a pattern of mismarked orders over five years, attributing these inaccuracies to a coding error within Citadel Securities' automated trading system. During this time, the firm mistakenly classified short sales as long sales and vice versa. Even more concerning to the SEC was that Citadel provided this erroneous data to regulatory authorities, including the SEC, without detection or correction.

Citadel Securities' Five-Year Error

Mark Cave, the Associate Director of the SEC's Division of Enforcement, said: "This action against Citadel Securities demonstrates that a broker-dealer's failure to comply with the requirements of Reg SHO can have negative downstream consequences on the accuracy of the firm's electronic records, including its electronic blue sheet reporting, depriving the Commission of important information about the markets it regulates."

Citadel Securities opted for a settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term without admitting or denying the findings by consenting to a cease-and-desist order. The settlement terms include a censure, a penalty of $7 million, and a series of undertakings aimed at rectifying the situation.

Meanwhile, Citadel Securities faced a slowdown in trading activity in June, according to a report by the Financial Times. This slowdown followed a period of heightened retail trading Retail Trading In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail trade In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail trade Read this Term earlier this year, driven in part by retail investors moving to online brokers like Robinhood.

Trading Revenue Decline

In particular, Citadel Securities reported a significant decline in net trading revenue for the first half of the current year, marking a drop of 36% compared to the previous year. Despite this decline, the company continued to distribute substantial second-quarter dividends totaling $500 million to its shareholders, including the Founder, Ken Griffin. Citadel Securities has maintained a streak of generating at least $1 billion in net trading revenue for the past 14 consecutive quarters, as mentioned by insiders familiar with the matter.

In June, Wall Street's giants, including Citadel, Charles Schwab, and Fidelity Investments, teamed up to invest in EDX Markets. The platform facilitates the trading of widely recognized digital currencies, including Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC). EDX plans to enhance market efficiency further with the launch of its clearinghouse, EDX Clearing, later this year.