3 ms·

>This is good for them because they might be able to get TLSA at $1599.20 and sell it to the User at $1599.84, and it's good for the user because contracts have

by treis 6y ago

>This is good for them because they might be able to get TLSA at $1599.20 and sell it to the User at $1599.84, and it's good for the user because contracts have a narrower spread and they can give the user the price they saw when they sold it (vs Schwab, which gives you direct access to the market so you need to set limits) This is not quite accurate. The user doesn't get a better price from a dark pool than they would in the market. They get filled at the market price. It's illegal for it to be higher and Citadel/Robinhood aren't going to leave money on the table by filling it cheaper. Citadel is willing to pay Robinhood for their order flow because it is less risky and therefore more profitable because Citadel won't end up on the wrong side of a trade. Robinhood uses this money to fund their business and takes any excess as profit.

JumpCrisscross 6y ago
> The user doesn't get a better price from a dark pool than they would in the market This is sort of true and sort of not. For an individual trader, it's mostly true. The law says orders should execute at no worse than the national best bid or offer (NBBO). The NBBO is the best marketed bid and marketed offer. It does not include orders on a dark pool. A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do.
- kippster 6y ago
  > A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do. Client orders are protected in this scenario by FINRA Rule 5320 - they can't trade ahead of client orders. https://www.finra.org/rules-guidance/rulebooks/finra-rules/5320 https://www.finra.org/rules-guidance/rulebooks/finra-rules/5...
  - JumpCrisscross 6y ago
    > Client orders are protected in this scenario by FINRA Rule 5320 That’s front running. It is illegal. Market making is done at risk. Citadel fills the client’s order at the NBBO out of its own book. It then turns around and sells stock at the best price it can find, which it hopes will be better than NBBO. (It may not!) This is market making and it’s quite legal.

by treis 6y ago

JumpCrisscross 6y ago

> The user doesn't get a better price from a dark pool than they would in the market This is sort of true and sort of not. For an individual trader, it's mostly true. The law says orders should execute at no worse than the national best bid or offer (NBBO). The NBBO is the best marketed bid and marketed offer. It does not include orders on a dark pool. A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do.

kippster 6y ago
> A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do. Client orders are protected in this scenario by FINRA Rule 5320 - they can't trade ahead of client orders. https://www.finra.org/rules-guidance/rulebooks/finra-rules/5320 https://www.finra.org/rules-guidance/rulebooks/finra-rules/5...
- JumpCrisscross 6y ago
  > Client orders are protected in this scenario by FINRA Rule 5320 That’s front running. It is illegal. Market making is done at risk. Citadel fills the client’s order at the NBBO out of its own book. It then turns around and sells stock at the best price it can find, which it hopes will be better than NBBO. (It may not!) This is market making and it’s quite legal.