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I'm not sure how paying for order flow is still legal. At this point it is basically brokerages offloading their fiduciary obligations(for money!) to legalized
by tcoppi 10y ago
I'm not sure how paying for order flow is still legal. At this point it is basically brokerages offloading their fiduciary obligations(for money!) to legalized front-running operations. As the article says, these operations are basically operating as exchanges, and they probably need to be regulated as such.
- kasey_junk 10y agoI think that more information being available about order flow practices is all-in-all a good thing, and I encourage the relevant regulatory authorities to watch it like a hawk. That said, I much prefer my free trades from Robinhood that are the outcome of payment for order flow, than I did the $25 it used to cost me to trade. For the kind of trading I do, it is a much better deal to let the internalizers capture the spread (even if it is not the true spread) than it is to not have internalizers.
- tcoppi 10y agoI agree, this is definitely a double-edged sword. Hopefully the outcome of this investigation is more transparency and fairness for retail traders, without completely destroying the execution cost reduction that has been made possible by them.