Citadel Securities is planning on exiting the retail CFD broker sector at the end of the first quarter of this year, TradeInformer understands.
The US market maker has acted as a liquidity provider to companies in the sector for several years, either directly to large brokers or more indirectly via partnerships with other liquidity providers. The company has offered trading in different asset classes in that time.
One liquidity provider, who was using Citadel for pricing and hedging, said the firm appeared to face particular problems with gold trading over the last couple of months and was told they would be switched off at the end of March.
Several other providers across the B2B and B2C CFD sector also said the market maker had said it would no longer provide services to them.
It is unclear why the firm has decided to exit the market.
It’s plausible it is partly due to gold, where the ability to offer the extremely tight pricing CFD firms want can be challenging. Citadel purportedly wanted to offer a fixed-spread product in this market, something that would have been extremely difficult to maintain over the last few months.
Another driver may simply be retail CFD flow that is extremely difficult to deal with. Many firms only pass on the sharpest flow they get to their LP, which even large investment banks and market makers either cannot handle or struggle to deal with.
