4 ms·
I doubt robinhood is acting as a market maker (counterparty), I think they're just widening the spread to cover fees.
by encoderer 9y ago
I doubt robinhood is acting as a market maker (counterparty), I think they're just widening the spread to cover fees.
- andrewla 9y agoThis is out-and-out illegal, and I can pretty much guarantee they are not doing it. The SEC has a group of regulations, RegNMS, which mean that you will never trade at a worse price than the best price offered in the marketplace. There are two ways that they can easily make money aside from fees. One is to lend their securities to other parties that want to make short sales; that's a fair amount of money. The other is to sell their order flow and keep the price improvement -- if a dark pool or router can fill the order at a better price than the NBBO (National Best Bid/Offer), then they can keep the difference. While the latter sounds a lot like "widening the spread", it is still guaranteed to be inside the best spread offered on all the trading centers that publish market data. EDIT: Note that I am referring strictly to their equities side; the cryptocurrency side has no such regulations and they could well be doing it. I interepreted the GP comment to mean how they make money as a company, rather than on these particular trades.