... it is not the case [ making money on commissions ] for Citigroup, which as the FT reports overnight, has shuttered its market making business in retail options "in a move that underscores how the boom in zero-commission trading has squeezed the profitability of the industry’s middlemen" despite the unprecedented surge in option trading.
Citing three sources, the FT reports that Citi closed the business - which serves retail broker-dealers such as Charles Schwab and Fidelity - at the start of last month. At the same time, Citi maintained its market making operations for institutional investors and high-net-worth customers, who still pay commissions.
The stated reason for the pullout is that Citi was unable to compete in a technology arms race to be among the fastest and most reliable venues on Wall Street, which is to be expected when Citi's competition was pureplay HFT firms.
Citigroup should read my blog and get a clue about how sandbox works.
The pit boss needs to respond asynchronously to the pit, at the point of divergence from balance. The pit boss removes skew in the 3D pits. He has to keep the skew under the error bound. That means automation. It is all about Markov N-tuples, and we haven't got a text book on that, yet. But stick to the 3 tuples.
Sorry about that.
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