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No mention of any other brokerage doing pfof? I think RH is pretty shady overall, but that seems kinda relevant context.
by tedunangst 6y ago
No mention of any other brokerage doing pfof? I think RH is pretty shady overall, but that seems kinda relevant context.
- Scoundreller 6y agoThe others all do too. RH realized there’s a lot more order flow to sell when there’s no commissions. Meme stocks may have more profitable order flow, I dunno. I’m still unsure of what RH did so wrong here that other brokers didn’t/aren’t. I think RH is making a lot more off securities lending than it is on order flow imo. Lending out highly shorted and hard-to-borrow shares can earns them tons of interest.
- getToTheChopin 6y agoAll brokerages make money from PFOF -- but it is a much larger revenue stream for RH compared to other brokers. https://www.morningstar.com/articles/1015686/robinhood-was-indeed-too-good-to-be-true https://www.morningstar.com/articles/1015686/robinhood-was-i... "That Robinhood sold its order flow is unremarkable, but the scale of its activities certainly merits comment. Forbes reports that in the first quarter 2020, 70% of Robinhood’s revenues derived from payments for order flows, as opposed to 17% for E-Trade and just 3% for Schwab. Yes, Robinhood has observed standard practice–but with distinctly above-average enthusiasm."
- tedunangst 6y agoNow I want to know where schwab gets the other 97% from.
- valuearb 6y agoWhy is this a surprise to anyone? How did customers think Robinhood was making money?