4 ms·

Are you sure you're not confusing it with tailgating, which is legal but sometimes frowned-upon? Front-running: Broker gets order, broker buys for self, broker

• brenden2 7y ago
  Yes I think you're right. I will edit my posts.
• im3w1l 7y ago
  Isn't what they do this: Broker gets order, sends it to their best buddy instead of normal market, buddy takes other side of order (at the same price as market would have given). The assumption being that someone who crosses the spread on the general market may have some good info they are trading on. But a robinhood trader who crosses the spread is basically just trading randomly, and is giving away the spread for nothing.
  • mason55 7y ago
    Yes, that's what happens, although "best buddy" is really "company that pays us the most for the orders." I am not sure if you meant it this way but "best buddy" implies that something shady is going on. If you want to pay Robinhood more for their order flow than Virtu & Citadel I'm sure they would be happen to send you all the orders you could fill.
    • im3w1l 7y ago
      It's essentially using a sub-tick size price improvement (but paid to the broker to cover trading fees) to jump the queue at the market. It arguably undermines the existence of price ticks. I think you know this but for the lurkers, the purpose of price ticks is to make the market first-come-first-serve. Without them people can raise the bid by 0.0000000001 to get first in line, making the market last-come-first serve. But as far as shadiness goes, it's a very light shade of gray.