4 ms·

> The fact that they can't offer any compensation might be a big problem for them, since they already have zero trading fees Robinhood makes the most money th

> The fact that they can't offer any compensation might be a big problem for them, since they already have zero trading fees Robinhood makes the most money than any known firm on Wall Street by getting paid specifically to leak user's trades to other traders. SEC requires a periodic report on that which shows compensation. Can't believe people are still buying Robinhood's pitch of misdirection.

LatteLazy 7y ago
Is there a source you can cite for that? Why would anyone want retail investor order data? Especially since most of their orders execute immediately, so you can just get the trade data from the venue...
- JumpCrisscross 7y ago
  > Why would anyone want retail investor order data? Former market maker here. Retail flow is low risk. If I buy $100mm of institutional flow, I could get a bunch of corporate hedging orders. Or I could make a single bet against George Soros. With retail, one tends to find lots of small orders. Even if there are some with high information, i.e. they're smart money and I'm going to lose money trading against them, they're small enough to be manageable. Retail is also low information. At an old job, we bought a prominent retail broker's options flow. The number of in-the-money unexercised options that would come through that pipe was mind-blowing. (Today, whoever was buying Robinhood's flow likely got the same.)
- a2h 7y ago
  Rule 606 disclosure for the source. And it's not about the trade data it's the order itself. Second link is a very thorough explanation. https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%20Rule%20606%20Report%20Disclosure%20-%20Q4%202019.pdf https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2... https://www.google.com/url?sa=t&source=web&rct=j&url=http://blog.themistrading.com/wp-content/uploads/2015/03/What-Every-Retail-Investor-Needs-to-Know.pdf&ved=2ahUKEwi475aysYDoAhWuY98KHR0HCPEQFjAAegQIBxAC&usg=AOvVaw0M_rFmz-YkQZu5pOnkiYVK https://www.google.com/url?sa=t&source=web&rct=j&url=http://...
SifJar 7y ago
I think you may misunderstand the concept of "Payment for Order Flow"
- rolltiide 7y ago
  In what way? How would you describe it in a way everyone can understand in as few words?
  - SifJar 7y ago
    It is not "leak user's trades to other traders", it is accepting payment from a third party in order to execute the trade via that third party.

LatteLazy 7y ago

Is there a source you can cite for that? Why would anyone want retail investor order data? Especially since most of their orders execute immediately, so you can just get the trade data from the venue...

JumpCrisscross 7y ago
> Why would anyone want retail investor order data? Former market maker here. Retail flow is low risk. If I buy $100mm of institutional flow, I could get a bunch of corporate hedging orders. Or I could make a single bet against George Soros. With retail, one tends to find lots of small orders. Even if there are some with high information, i.e. they're smart money and I'm going to lose money trading against them, they're small enough to be manageable. Retail is also low information. At an old job, we bought a prominent retail broker's options flow. The number of in-the-money unexercised options that would come through that pipe was mind-blowing. (Today, whoever was buying Robinhood's flow likely got the same.)
a2h 7y ago
Rule 606 disclosure for the source. And it's not about the trade data it's the order itself. Second link is a very thorough explanation. https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%20Rule%20606%20Report%20Disclosure%20-%20Q4%202019.pdf https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2... https://www.google.com/url?sa=t&source=web&rct=j&url=http://blog.themistrading.com/wp-content/uploads/2015/03/What-Every-Retail-Investor-Needs-to-Know.pdf&ved=2ahUKEwi475aysYDoAhWuY98KHR0HCPEQFjAAegQIBxAC&usg=AOvVaw0M_rFmz-YkQZu5pOnkiYVK https://www.google.com/url?sa=t&source=web&rct=j&url=http://...

SifJar 7y ago

I think you may misunderstand the concept of "Payment for Order Flow"

rolltiide 7y ago
In what way? How would you describe it in a way everyone can understand in as few words?
- SifJar 7y ago
  It is not "leak user's trades to other traders", it is accepting payment from a third party in order to execute the trade via that third party.