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That's why most of these HFT-sponsored exchanges (read: BATS, CHX, etc) pay retail brokers (e.g. eTrade, Scottrade, etc.) for their flow.
by zeeshanm 11y ago
That's why most of these HFT-sponsored exchanges (read: BATS, CHX, etc) pay retail brokers (e.g. eTrade, Scottrade, etc.) for their flow.
- neomantra 11y agoI would be interested in your source for that comment, as I think it is untrue (at least for US exchanges, I don't know rules in other countries). I am not saying payment-for-order-flow doesn't exist, but the buyers are firms like Citadel and other "internalizers", not exchanges. If by "paying" you are referring to the maker/taker rebate model, that is paid to any market participant, not just retail brokers.
- elecengin 11y agohttps://www.nyse.com/publicdocs/nyse/markets/liquidity-programs/arca_rlp_fact_sheet.pdf https://www.nyse.com/publicdocs/nyse/markets/liquidity-progr... http://cdn.batstrading.com/resources/release_notes/2012/BATS-Introduces-Retail-Price-Improvement-Program.pdf http://cdn.batstrading.com/resources/release_notes/2012/BATS...
- zeeshanm 11y agoAnd these exchanges have historically been doing it. BATS has been around for about 10 years. But the initial players like Island ECN, Archipelago, and others (now merged into NSQD, NYSE, etc.) have been paying retail brokers for their flow since late 90s. This is what attracts big fishes to trade at their venues. When you do the wrong over several times without getting caught it becomes a standard (read: make-or-take rebates)
- harryh 11y agoWhich is why retail level commissions have dropped to zero (or close to it).