4 ms·

So you would rather pay a commission fee AND have order-flow sold as opposed to no fee and just sold order-flow? No matter where you trade right now, all the br

So you would rather pay a commission fee AND have order-flow sold as opposed to no fee and just sold order-flow? No matter where you trade right now, all the brokerages are practicing this.

valuearb 6y ago
Except that other brokerages pass 80% of order flow savings to customers while Robinhood keeps 80% of it. Robinhood is more expensive than commissioned brokers, it just hides the charges better.
- X6S1x6Okd1st 6y ago
  Has there been a study that shows that robinhood is more expensive than various commissioned brokers?
  - SpicyLemonZest 6y ago
    I don't know if there's been a study, but that's the substance of the SEC charges that the source article is describing. (It's not clear to me if the full details of the SEC's calculation are private or I just don't know how to find them.)
    - iandanforth 6y ago
      The linked article contradicts this point. On balance today Robinhood is not more expensive. The parent's point about the slippery slope still stands of course.
  - ashtonkem 6y ago
    Sounds like it’s about to be litigated in court.
- boringg 6y ago
  Is it though? 80% of order flow savings ... 80% of exactly how much?
- thebean11 6y ago
  What mechanism do they use to pass down these savings? I'm definitely not aware of anything like that.
  - lucisferre 6y ago
    I suggest you read the article then
  - gamblor956 6y ago
    For example: if you want to buy X for $100, but it's available for $98, then the traditional broker will buy it for $98. Robinhood, instead, will go with the $99.99 offer if that seller offers them more money. You were willing to pay $100, so from your point of view you weren't "harmed" either way, but with the traditional broker you saved $2/share, and with Robinhood all the savings went to them. Generally, brokers are either required to go with the best offer, or, if they don't, explain to customers that they don't and why. Robinhood violated that rule by marketing themselves and going with the best offers (but actually did the opposite) and that's what the SEC is fining them for.
- esoterica 6y ago
  > Robinhood is more expensive than commissioned brokers, it just hides the charges better. Which do you think is more expensive for the customer: 1. $0.003 per share of inferior execution on a retail order of 50 shares. 2. A $9.99 commission.
  - Retric 6y ago
    Based on actual customer testimony: https://news.ycombinator.com/item?id=25519091 https://news.ycombinator.com/item?id=25519091 Assuming they have multiple hidden revenue sources, that 9.99$ commission could be up to ~4 orders of magnitude cheaper.
    - esoterica 6y ago
      Sloppy handling of expiring options has nothing to do with PFOF or the SEC settlement being discussed in this article.
      - Retric 6y ago
        The implication is their making up the difference in other ways. As such the example linked is a source of profit to make up for the missing 9.99$, not a customer service issue. So, sure the article is talking about one specific means their using, but that’s hardly the only option they have. Remember the best conmen run multi layered con’s, as people finding the first layer and trying to profit from it are the easiest marks.
        esoterica 6y ago
        Can you explain how you think closing options positions a few minutes early can magically generate profit for Robinhood? The OP complained that with the benefit of hindsight the options went up in value after being sold, but given that all retail traders are degenerate gamblers with zero actual alpha there was a 50/50 chance the options could have gone in the entirely opposite direction, and selling them early could just as easily have saved the commenter thousands of dollars.

So you would rather pay a commission fee AND have order-flow sold as opposed to no fee and just sold order-flow? No matter where you trade right now, all the brokerages are practicing this.

valuearb 6y ago

Except that other brokerages pass 80% of order flow savings to customers while Robinhood keeps 80% of it. Robinhood is more expensive than commissioned brokers, it just hides the charges better.

X6S1x6Okd1st 6y ago
Has there been a study that shows that robinhood is more expensive than various commissioned brokers?
- SpicyLemonZest 6y ago
  I don't know if there's been a study, but that's the substance of the SEC charges that the source article is describing. (It's not clear to me if the full details of the SEC's calculation are private or I just don't know how to find them.)
  - iandanforth 6y ago
    The linked article contradicts this point. On balance today Robinhood is not more expensive. The parent's point about the slippery slope still stands of course.
- ashtonkem 6y ago
  Sounds like it’s about to be litigated in court.
boringg 6y ago
Is it though? 80% of order flow savings ... 80% of exactly how much?
thebean11 6y ago
What mechanism do they use to pass down these savings? I'm definitely not aware of anything like that.
- lucisferre 6y ago
  I suggest you read the article then
- gamblor956 6y ago
  For example: if you want to buy X for $100, but it's available for $98, then the traditional broker will buy it for $98. Robinhood, instead, will go with the $99.99 offer if that seller offers them more money. You were willing to pay $100, so from your point of view you weren't "harmed" either way, but with the traditional broker you saved $2/share, and with Robinhood all the savings went to them. Generally, brokers are either required to go with the best offer, or, if they don't, explain to customers that they don't and why. Robinhood violated that rule by marketing themselves and going with the best offers (but actually did the opposite) and that's what the SEC is fining them for.
esoterica 6y ago
> Robinhood is more expensive than commissioned brokers, it just hides the charges better. Which do you think is more expensive for the customer: 1. $0.003 per share of inferior execution on a retail order of 50 shares. 2. A $9.99 commission.
- Retric 6y ago
  Based on actual customer testimony: https://news.ycombinator.com/item?id=25519091 https://news.ycombinator.com/item?id=25519091 Assuming they have multiple hidden revenue sources, that 9.99$ commission could be up to ~4 orders of magnitude cheaper.
  - esoterica 6y ago
    Sloppy handling of expiring options has nothing to do with PFOF or the SEC settlement being discussed in this article.
    - Retric 6y ago
      The implication is their making up the difference in other ways. As such the example linked is a source of profit to make up for the missing 9.99$, not a customer service issue. So, sure the article is talking about one specific means their using, but that’s hardly the only option they have. Remember the best conmen run multi layered con’s, as people finding the first layer and trying to profit from it are the easiest marks.
      - esoterica 6y ago
        Can you explain how you think closing options positions a few minutes early can magically generate profit for Robinhood? The OP complained that with the benefit of hindsight the options went up in value after being sold, but given that all retail traders are degenerate gamblers with zero actual alpha there was a 50/50 chance the options could have gone in the entirely opposite direction, and selling them early could just as easily have saved the commenter thousands of dollars.