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Did their clearing firm force their hand?

Webull had to stop because of their clearing firm.

My guess is Citadel and Susquehanna stopped routing RH's flow, and since RH, despite being a $10b company, is too incompetent to route its own orders to the exchanges, they had to acquiesce to the demands of the companies that route for them.

My impression was that achieving best execution without an intermediary was actually extremely difficult and not something most retail brokerages attempted to integrate. Is this not the case?

Most don't, but most aren't the most valuable brokerage firm in the US. Interactive Brokers does. TD does. ETrade didn't, but Citadel owned a huge stake in ETrade.

The main reason RH hasn't done it is that they have this free model, and whenever you route your own flow, it costs money--too much money for RH to swallow and make back on margin interest. So instead of creating a backup that makes them unbeholden to the order routers, they just hoped the problem would never occur by diversifying the places they route flow to.

I didn't realize RH was the most valuable brokerage firm in the US!

I understand their business model. They would lose their only revenue stream if they routed themselves.

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