https://www.barrons.com/articles/payment-for-order-flow-sec-...
> In an Aug. 13 working paper, five finance professors analyzed 85,000 stock trades they made through five leading retail brokers. They did get significantly different pricing through different brokers for identical orders to buy or sell at the current market price.
> But their best pricing came from a broker that takes payment for order flow, namely TD Ameritrade, now a unit of Charles Schwab. Fidelity, which takes no order payments, got worse prices on the professors’ trades than did TD Ameritrade. And its prices were no better than those from the E*Trade unit of Morgan Stanley, which does take payments. Robinhood, which used revenue from order-flow payments to subsidize the industry’s first commission-free trading, delivered middle-of-the-pack pricing.
First Citadel destroys lit markets by having the majority of US orders routed to them for dark execution using things like Citadel Connect (less regulated and worse than a dark pool, which they also love by the way) and then they scream "look we give you better prices than you can get at the lit markets that we just destroyed (after literally front-running you)". Please love us, we're doing god's work!
Sidenote: like Madoff there's a massive conflict of interest where Ken Griffin owns both a (huge) market maker business as well as a hedge fund (that had 64 billion in securities sold, not yet purchased "at fair value" on its balance sheet against some 4 billion in assets).
PS: I'm just going to call it. That CEO Zhang doesn't exist and is generated by AI, just to distract from all the massive Citadel crime. Maybe tin foil, maybe not.
PS PS: Citadel need to dissapear and Griffin needs to be in jail. He is Madoff 2.0 supercharged.
Anyone who thinks things were better for retail back in the day with at least $5+ per side and some guy in the middle in NY or Chicago making a market on a floor is a moron. There is just no other way to put it.
Markets in 2023 is an absolute dream for retail.
In case you’re wondering how this is even possible to be a win-win, it’s because retail order flow is considered non-toxic, roughly meaning it’s OK to market-make against because it’s roughly symmetric and not backed by a market moving signal. So creating an arena for retail orders to fill each others’ orders can allow for legitimately better fills because it’s safer for the market maker.
From what I understand PFOF is only problematically profitable in the options market where NBBO spreads can be quite wide, but I’m pretty sure Citadel is not even a major player there.
A quick sanity check suggests Vanguard[1], Fidelity[2], Schwab[3], and TD Ameritrade[4] disagree with your assertion.
[1] https://nms606.karngroup.com/vgrd/606a/2023Q1/588e3c62ff
[2] https://clearingcustody.fidelity.com/trade-execution-quality...
Not sure if it's the same niche but bloomberg quotes Citadel at 25% market share[0]
[0] https://www.bloomberg.com/news/articles/2020-02-25/citadel-s...
What’s an example?
If all the trade volume on an exchange moves to a private room, because the private room is cheaper, because its cheaper cuz of the volume, and it has the volume cuz everyone moved there, because its cheaper ...
Sure, they invested a lot of money to make technology that can beat the exchanges. But part of the reason they beat the exchanges is because they took all the trades and can match better not because of their tech but because of all the liquidity.
This is the essence of PROF price improvement.
The reason for this is that they can give tighter fills to small scale (and presumably dumb) retail investors.
> and the Robinhood founders.
Do you mean the Robinhood shareholders?
Generally I was entering and exiting, not holding to expiry, so I had 0.65x4+fees = 2.70 in commissions for a given contract pair on Fidelity. Nowadays it'd often be about 2.05 on Fidelity because they let you close contracts under .65 for free. I didn't think to negotiate commissions, but I was surely too much of a small fry for that.
That’s not true, HFT firms like Citadel are required to improve on the national bid/ask spread. They are saving the consumers money compared to their orders being sent to NYSE or NASDAQ
FINRA requires reasonable effort, which is curious.
From past threads this is exactly this kind of nonsense I expected: People with a tenuous grasp on reality chiming in with moronic conspiracy theories. WSB atleast acknowledges that they are a bunch of retards.
How would retail traders blame Pelosi (but I believe you that they would)? The Pelosi's are basically wealthy because they're in their 80s and Mr Pelosi bought early cheap stock in many successful Silicon Valley (then) startups.