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What fiduciary duty? They disclose right up front that they are paid for order flow, and I assumed, correctly, that this meant they were allowing Citadel, et al
by yborg 6y ago
What fiduciary duty? They disclose right up front that they are paid for order flow, and I assumed, correctly, that this meant they were allowing Citadel, et al. to front-run the retail orders and skim risk-free cream from the rubes. As a former trader, if you're fine making a donation to Ken Griffin with every trade, I suppose there's little more to say there, but Robinhood markets their service to unsophisticated investors that may not realize that is what they are effectively doing.
- kasey_junk 6y agoBrokerages have a duty to their traders. I imprecisely spoke when I used fiduciary as recent guidance says they have the lower “suitability standard”. With regard to fills they are covered by reg nms and the nbbo. All of that is a much stronger regime than Facebook is under and to my opinion Facebook uses their power much more detrimentally. Reasonable people can disagree on that. All retail brokers besides vanguard and IB’s paid tier sell order flow. This enables cheap/free trades and low spreads which I view as well worth the execution difference ymmv. I’d also suggest if your mental model is that citadel is doing risk free front running you don’t understand market dynamics correctly. In any case it’s cheaper for me to execute my retail trades than any time in history. I’m good with that outcome.
- entropic88 6y agoI'm sure the average Robinhood investors volume is low enough that an Office Space penny fraction skimming scheme is a pretty meh thing. But combined, it's sure is something.
- kasey_junk 6y agoThat’s not how internalizers work...