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You'd only typically lose cents (if that; often enough you don't lose anything) per share. And there's no easy way to validate the price is "fair," since share
by reissbaker 6y ago
You'd only typically lose cents (if that; often enough you don't lose anything) per share. And there's no easy way to validate the price is "fair," since share prices are so fluid.
It's also a fairly victimless crime, as the article notes (although it downplays this); in practice, it seems users typically saved more money thanks to Robinhood's zero-fee trading than they lost in less optimal pricing for their trades. The problem here wasn't that payment-for-order-flow is bad — even Schwab does it for their zero-fee trading platform, and in practice it's often a good tradeoff — the problem is Robinhood lied about it.
- bostik 6y agoAnd the fact that RH kept a far larger portion of the price improvement as their kickback. As the article mentions, the standard brokerage cut is 20% from the price improvement. RH demanded 80% of it for themselves. Sure, their customers still got a better price than available in the lit exchange(s) but they were bilked by the 4x hidden commission.