Citadel and Citadel Securities are two separate companies founded by Ken Griffin that do fundamentally different things in finance. Citadel (formally Citadel LLC) is a hedge fund that invests money on behalf of institutions and wealthy individuals. Citadel Securities is a market maker that executes trades for retail brokerages and institutional clients. They share an owner and a name, which is why people confuse them, but they sit on opposite sides of the market and answer to different rulebooks.
What Citadel LLC Does
Citadel LLC is one of the world’s largest hedge funds, managing $66 billion in investment capital as of February 2026.1Citadel. Citadel – Identifying the Highest and Best Uses of Capital Griffin founded the firm in 1990. It pools money from pension funds, endowments, and high-net-worth individuals, then invests that capital across a wide range of assets to generate returns.2Citadel. Kenneth C. Griffin – Founder and CEO
The approach is multi-strategy. Teams trade equities, fixed income, commodities, and derivatives, often at the same time. Some strategies take long and short positions in stocks. Others analyze broad economic trends to bet on currencies or interest rates. Still others look for pricing gaps between related securities. Quantitative analysis and technology drive the decisions.
In industry terms, Citadel LLC sits on the buy side. It makes investment decisions with the goal of growing its portfolios and earns its money from investment returns. Its advisory arm is a registered investment adviser under the Investment Advisers Act of 1940, which governs how firms manage client money, disclose conflicts of interest, and meet their fiduciary duties.3Investment Adviser Public Disclosure. Citadel Advisors LLC – Investment Adviser Firm
What Citadel Securities Does
Citadel Securities is a different animal. Griffin founded it in 2002 as a market maker, meaning it stands ready to buy or sell securities at any moment so other investors can execute their trades quickly.2Citadel. Kenneth C. Griffin – Founder and CEO Place a stock order through a retail brokerage app and there’s a good chance Citadel Securities is on the other side of it. The firm handles roughly 40% of all U.S. retail equity volume on a typical day.
Market makers quote both a price they’ll pay (the bid) and a price they’ll sell at (the ask). The small gap between the two is how they earn revenue. Their constant presence keeps that gap narrow, which saves ordinary investors money and keeps trading orderly during volatile periods.
Designated Market Maker on the NYSE
Citadel Securities is also the leading Designated Market Maker on the New York Stock Exchange, responsible for roughly 62% of NYSE-listed securities and more than 1,900 individual listings. It manages opening and closing auctions, provides liquidity during market stress, and has been selected by corporate issuers for more than 80% of NYSE IPOs.4Citadel Securities. Designated Market Maker (DMM)
Payment for Order Flow
A significant share of Citadel Securities’ retail business runs through payment for order flow (PFOF). Retail brokerages like Robinhood route their customers’ orders to Citadel Securities instead of sending them directly to a public exchange. In return, Citadel Securities pays the brokerage fractions of a cent per share. SEC filings show Citadel Securities as a top execution venue for Robinhood, handling nearly 39% of Robinhood’s non-directed options orders in a recent quarter.5SEC.gov (EDGAR). Robinhood Financial LLC – Held NMS Stocks and Options Order Routing Public Report
PFOF is controversial. Critics argue it creates a conflict of interest because brokers may route orders based on who pays the most rather than who provides the best execution. Defenders counter that retail investors get commission-free trading and often slightly better prices than they would on a public exchange. Federal securities law requires brokers to seek the best possible execution regardless of any order-routing payments.
How the Two Entities Stay Separate
Common ownership of a hedge fund and a market maker raises an obvious question: could the market maker’s live view of order flow give the hedge fund a trading edge? Federal securities law addresses this directly. Both the Securities Exchange Act (for broker-dealers) and Section 204A of the Investment Advisers Act (for registered advisers) require affiliated firms to establish, maintain, and enforce written policies designed to prevent the misuse of material nonpublic information.6U.S. Securities and Exchange Commission. Staff Summary Report on Examinations of Information Barriers
In practice, these information barriers mean physical separation of office space, restricted electronic access to each entity’s data systems, and strict limits on what employees on one side can communicate to employees on the other. SEC examination staff have noted that firms where a broker-dealer is closely integrated with an affiliated investment adviser face heightened challenges in designing adequate controls.6U.S. Securities and Exchange Commission. Staff Summary Report on Examinations of Information Barriers The two Citadel entities operate as separate legal companies with separate management, separate technology, and independent compliance programs. Whether any particular firm’s barriers hold up is tested through regulatory examinations, not just policy documents.
Why the Two Names Get Confused
Most people search for the difference between these companies because of GameStop. In January 2021, GameStop’s stock surged as retail traders coordinated buying through online forums. At the time, Citadel LLC’s hedge fund had invested in Melvin Capital, a fund holding large short positions in GameStop and losing heavily. Meanwhile, Citadel Securities was executing a flood of retail buy orders for GameStop through brokerages like Robinhood. When Robinhood abruptly restricted customers from buying GameStop shares, suspicion fell on both Citadel entities.
The accusation was that Citadel had pressured Robinhood to halt buying to protect its hedge fund’s Melvin investment. Ken Griffin testified before Congress under oath that this did not happen: “Let me be perfectly clear: Absolutely not,” he said when asked whether anyone in his organization contacted Robinhood about restricting GameStop trading. Griffin confirmed that Citadel LLC had invested in Melvin Capital that week but described it as a standard opportunity to buy low.7GovInfo. Game Stopped? Who Wins and Loses When Short Selling Is Restricted
The SEC later published a staff report examining market structure conditions during the episode. It did not conclude that Citadel had coordinated with Robinhood to restrict trading. The incident fueled ongoing debate about PFOF, the concentration of retail order execution among a few wholesale market makers, and how airtight the information barriers between affiliated entities really are.
Different Regulators, Different Rules
Because the two companies do different things, they answer to different regulators. Citadel LLC’s advisory arm is registered with the SEC under the Investment Advisers Act of 1940, which imposes fiduciary duties, disclosure requirements, and compliance standards on firms that manage other people’s money.8Securities and Exchange Commission. Citadel LLC and CEIF LLC Notice of Application
Citadel Securities is a broker-dealer regulated by both the SEC and FINRA under a separate body of rules covering market conduct, trade reporting, and capital requirements.9FINRA. Citadel Securities Institutional LLC – BrokerCheck Broker-dealer rules focus on fair execution and market integrity rather than the fiduciary standards that govern investment advisers.
Enforcement History on the Market-Maker Side
Citadel Securities has drawn regulatory penalties that show the scrutiny market makers face. In 2023, the SEC charged the firm with mismarking millions of orders over a five-year period, incorrectly labeling certain short sales as long sales and vice versa. The firm attributed the errors to a coding bug in its automated trading system and agreed to pay a $7 million penalty, remediate the error, and review its programming logic.10U.S. Securities and Exchange Commission. SEC Charges Citadel Securities for Violating Order Marking Requirements of Short Sale Regulations
In 2020, FINRA fined the firm $700,000 for trading ahead of certain inactive customer orders in the over-the-counter market between roughly 2012 and 2014, violating rules that prohibit a firm from executing its own trades before filling customer orders at the same or better price. Griffin acknowledged the violation during congressional testimony and attributed it to a systems failure.7GovInfo. Game Stopped? Who Wins and Loses When Short Selling Is Restricted
Neither penalty was described by regulators as intentional misconduct. Both were traced to technology failures. Still, at the scale Citadel Securities operates, processing billions of shares daily, small coding errors can turn into millions of mismarked trades.
Side-by-Side Comparison
- Business type: Citadel LLC is a hedge fund on the buy side; Citadel Securities is a market maker and broker-dealer on the sell side.
- Founded: Citadel LLC in 1990; Citadel Securities in 2002.
- How they earn: Citadel LLC earns investment returns on the capital it manages. Citadel Securities earns the bid-ask spread on trades it facilitates and receives payment for order flow.
- Clients: Citadel LLC serves institutional investors and high-net-worth individuals. Citadel Securities serves retail brokerages, pension programs, central banks, and other financial institutions.
- Primary regulator: Citadel LLC’s advisory arm falls under the Investment Advisers Act of 1940. Citadel Securities is regulated as a broker-dealer by the SEC and FINRA.
- Scale: Citadel LLC manages $66 billion in investment capital. Citadel Securities is the leading Designated Market Maker on the NYSE and handles a substantial share of all U.S. retail equity volume.