Ken Griffin Testimony To Senate On HFT [TRANSCRIPT]VW Staff
Media shy Ken Griffin submitted testimony today to the Senate, full text can be found below.
Chairman Johnson, Ranking Member Crapo, Members of the Committee, I am Ken Griffin, Founder and CEO of Citadel LLC. I appreciate the opportunity to testify here today and share our views regarding the state of the U.S. equity markets.
Established in 1990, Citadel is a leading global financial institution that provides asset management and capital markets services.
Ken Griffin on Citadel’s equity research process
Citadel manages in excess of $20 billion in investment capital on behalf of institutional investors and high net worth families. As a significant investor in the U.S. equity markets, Citadel has a strong interest in the integrity, transparency, efficiency, and stability of our markets. Our equity research teams follow over 1,800 public companies, seeking to identify appropriate investment opportunities. Our equity research process, combined with our ability to execute upon our investment ideas in a cost-effective manner, enables us to deliver returns to the pensions, endowments, sovereign wealth funds and other institutions that entrust us with their investment dollars.
Citadel Securities is one of the leading market makers in the United States, and is a market leader in the execution of orders on behalf of retail investors. Citadel Securities makes markets in more than 7,000 U.S.-listed securities and 18,000 OTC securities worldwide. Since 2005, we have used our automated trading systems to deliver greater reliability, innovation and service to retail investors. In short, we empower retail investors by deploying sophisticated technology with respect to market data, order routing, and execution strategies in providing best execution.
Ken Griffin: Lower-cost trades for retail investors
Our capabilities allow us to deliver faster, more reliable and lower-cost trades for millions of retail investors. This has made us a trusted and valued resource to most of America’s major retail brokerage firms. Our continued investment in people, compliance, process and technology earns us business on the merits, and I am proud to say that our continued growth is evidence of the enormous commitment we have made to support the interests of retail investors.
Citadel’s experience as both an institutional investor and an active liquidity provider in the U.S. equity markets gives us deep insight into the strength, structure and resilience of our equity markets. From that vantage point, I can state without hesitation that the U.S. equity markets are the fairest, most transparent, resilient and competitive markets anywhere in the world.
Ken Griffin: Role of U.S. equity markets in economy
The U.S. equity markets play a fundamental role in our economy. They facilitate capital formation by channeling savings into productive enterprises, creating a win-win for American investors and businesses, both small and large. The more efficiently our markets operate, the greater the benefit to the investing public and to the enterprises that rely on them to fund the growth of their businesses.
In recent months, some have questioned the fairness of U.S. equity markets. They have raised serious questions about the changes that have taken place in our markets. They have called into question the motives, and in some cases even the integrity, of market participants, exchanges, regulators and virtually everyone else who has introduced the changes that have unleashed competition and revolutionized the way our securities markets work.
It is my intent today to respond to this criticism, and to separate fact from fiction.
Over the past two decades, a wave of innovation has swept through the markets in response to new technologies and thoughtful regulation. This has disrupted the “old boys’ network” to the benefit of all investors. While the basic function of the stock market – matching buyers and sellers – remains the same, the mechanisms through which buyers and sellers come together has been revolutionized. In the supposed “good old days,” much of the trading in a given stock happened on the trading floor of a single stock exchange in a single specialist post under the control of a single specialist.