A high-frequency trading expert explains why you shouldn't fear how Robinhood makes money

Episode 24 of Season 2 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Tarun Chitra, founder and CEO of Gauntlet.

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Before Tarun Chitra built out his company, he spent years doing quantitative research and development for places like D.E. Shaw Research and Vatic Labs. Chitra took his experience in machine learning to create and head a simulation platform for crypto networks — Gauntlet — which garnered backing from companies like Coinbase, Distributed Global and Polychain, among others.

Gauntlet provides tools for crypto developers to forecast security risks, possible governance snags and consensus mechanism issues. By forecasting such problems and showing how they could affect assets or network activity, developers can make more informed decisions about security and governance structures.

In this week's episode of The Scoop, Chitra spoke from his experience in the high-frequency trading (HFT) world. Chitra's appearance coincided with growing concerns surrounding the market activity driven by Robinhood traders, as users of the app continue to buy up stocks that other investors have dumped.

Much of the conversation also coincides with the conversation surrounding brokerage and payment for order flow (PFOF), as some critics object to selling order flow to market makers, claiming it creates a conflict of interest. The Block recently uncovered how Robinhood received more than $90 million in PFOF payments during Q1. Chitra discussed the HFT world's view on PFOF and broke down some of the nuance in the transactions on this week's episode.

Chitra also touched on:

  • Why private exchange traded funds aren't that private
  • Whether open finance has structural advantages in comparison to legacy market structure 
  • If those possible advantages are enough to drive volumes in the same league as traditional markets
  • The role of transparency in both the Open Finance and traditional finance ecosystems.

Listen to this week's episode on Apple, Spotify, GooglePlay, Stitcher or wherever you listen to podcasts.

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