CNBC’s Kate Kelly speaks to Citadel founder and CEO Ken Griffin, about Time Warner Inc (NYSE:TWX)’s rejection of Twenty-First Century Fox Inc (NASDAQ:FOXA)’s takeover bid, and whether he expects more consolidation in the media space.
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Ken Griffin: Time Warner & 21st Century Fox deal will happen
Ken Griffin addresses payment for order flow
CNBC’s Kate Kelly speaks to Citadel founder and CEO Ken Griffin, about the practice of payment for order flow, and new technologies involved in investing.
Transcript
michael louis, flash boys. debate over high frequency trading. you testified about the topic last week, what you do now, what you’ve done historically, and i know from the remarks from the day ewe feel what happened in recent years is good for investors that vast technology improved ore fills for everybody, that the old boys network of the floor brokerage firms and so on have been upended in a constructive way. that said, there’s interesting details in louis’s book about payment for order flow, for example. what’s the rationale for payment for order flow? do you guys do it, and why? payment for order flow is where a large brokerage house, generally the online brokers, are able to negotiate de minimis payments when the time and order is executed on behalf of the retail investor. it’s one-tenth percent of a share is typical flow number for the industry. it’s a practice that has a long history. it has replaced a variety of business relationships that used to exist. it’s replaced internalization. if you go back just 15 years ago, a huge portion of our retail orders in the united states was internalized by the exiting broker. an early version of dark pools. i wouldn’t say it’s an early version of dark pools, but where the markets were 125 years ago.
