4 ms·
Funny that you are being played most, when you think you are in control.
by ok2938 5y ago
Funny that you are being played most, when you think you are in control.
- RobRivera 5y agoyea - everytime I try to explain to peers and family what the price of free is, deaf ears.
- ivalm 5y agoIt’s better than free, you get a discount relative to NBBO.
- repsilat 5y agoThe higher-level argument might be that if PFOF didn't exist, NBBO might be better. If Citadel et al wanted to make markets they'd have to publish their prices. (Of course, that gets rid of the "market segmentation" signals, so it'd probably make life a little better for institutions and make life a little worse for individuals, on net. No doubt smart people could disagree about how much of each effect there would be.)
- ivalm 5y ago> that gets rid of the "market segmentation" signals Exactly, retail investors should basically be happy with PFOF.
- missedthecue 5y agoI understand that Robinhood sells order flow and that you may get a worse fill because of it, but is the average Robinhood user getting 3 cents of slippage on their order of 1 share of Ford worse than a $10 round trip in order fees from a more premium broker on the same trade? I think the order flow model is better for most retail traders. Obviously, if you're buying $20k in stock at a time, paying the fees will be better, but that's not your average Robinhood user.
- benmanns 5y agoEveryone sells order flow. It’s: do you want sale of your order flow to be the only fee you pay or do you want to pay commissions on top of that, too?
- twobitshifter 5y agoThat’s not true. Fidelity does not receive pfof.
- benmanns 5y agoTheir 606 disclosure does have PFOF https://clearingcustody.fidelity.com/app/proxy/content?literatureURL=/9901886.PDF https://clearingcustody.fidelity.com/app/proxy/content?liter...
- twobitshifter 5y agoFirst I’ve heard that. I looked it up and this is for options not equity. https://www.spglobal.com/marketintelligence/en/news-insights/trending/IiJL9zOpAk76f_BrDunluA2 https://www.spglobal.com/marketintelligence/en/news-insights...
- porb121 5y agoYou are literally required to get better fill prices than the market with PFOF. You aren't being played any more than if you just send a normal limit order to the market
- stouset 5y agoWhy—exactly—do you reason that someone is willing to pay $109 per user per year for their order flow? Put another way, Robinhood’s actual customers are confident that they are able to extract in excess of $109 in value each year they purchase the flow of orders from a given Robinhood user. From where and/or from whom do you suppose this money is being extracted?
- cturner 5y agoThere may be opportunity to build a Robin Hood competitor by transparently passing the PFOF fees through to users, rather than pocketing them (as Robin Hood does). Imagine if you paid a monthly $5 subscription to be a member of a broker, and then had unlimited free executions, with the PFOF fees being clearly shown, and credited to your account.
- asdff 5y ago>From where and/or from whom do you suppose this money is being extracted My guess is from other funds that aren't privy to what horse the lemmings are betting on today and riding that wave.
- porb121 5y ago> Why—exactly—do you reason that someone is willing to pay $109 per user per year for their order flow? Adverse selection is scary and knowing your counterparty is worth a lot. This is not as sinister as you're making it out to be.
- stouset 5y agoIn other words, Robinhood is bringing fresh chum to the financial sharks of the world. How do we reconcile this with the narrative that they’re the good guys delivering wealth generation through investing to the masses?
- cloudwalking 5y agoIf UX was the gating factor for buying crypto, and Robinhood let you buy crypto... you had _enough_ control.