The Financial Relationship
According to Bloomberg reporting in 2018, 40% of Robinhood's revenue at that time came from selling customer orders to firms including Citadel Securities. In 2020, according to SEC documents, Citadel Securities paid Robinhood approximately $1.5 billion in PFOF. This is, by any measure, a major financial relationship that shapes the incentives of one party toward the other.
The Robinhood SEC Settlement
In December 2020, the SEC settled with Robinhood for $65 million, finding that Robinhood had failed to disclose PFOF conflicts and had provided customers with inferior execution. The settlement covered the period 2015–2018. The SEC's action was directed at Robinhood and established that the broker's routing decisions did not serve its customers' best interests.
The GameStop Episode
During the January 2021 GameStop frenzy, Robinhood halted purchases of GameStop while Citadel Securities was its primary market maker and Citadel Advisors had invested in the short-selling fund Melvin Capital. Congressional hearings found no evidence of direct coordination between Robinhood and Citadel on the halt decision.
Current Status
Robinhood continues to receive PFOF from wholesale market makers. The company went public in 2021. Its Rule 606 disclosures, publicly available, detail current routing arrangements. Whether the Robinhood-Citadel commercial relationship continues and at what scale is discernible from periodic public disclosures.