Systemic Designation
Some advocates argue that a firm of Citadel Securities' scale — processing a dominant share of U.S. retail equity order flow and operating in multiple asset classes — should be designated as a systemically important financial institution (SIFI) or equivalent, subjecting it to enhanced capital, liquidity, and operational requirements. The SIFI designation framework under Dodd-Frank was designed for banks; its extension to non-bank market makers would require regulatory action.
Mandatory Quote Competition
The SEC's 2022 order competition proposal would have required retail orders to be exposed to auction competition before routing. This would reduce the ability of a single market maker to capture retail order flow through PFOF payments and could improve execution quality through competition. Industry argued this would add complexity without benefit; investor advocates argued it would meaningfully improve outcomes.
Information Barrier Requirements
For firms with affiliated investment management operations — like Citadel Securities and Citadel Advisors under Kenneth Griffin — enhanced information barrier requirements could reduce the risk of conflicts between market-making and investment management. Strengthening these requirements beyond existing standards has been discussed but not implemented.
Enhanced Reporting and Transparency
Additional reporting requirements — requiring more granular disclosure of execution quality, PFOF economics, and routing decision processes — could improve accountability without changing the underlying market structure. Enhanced transparency is typically less controversial than structural changes and could be implemented more quickly.