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Until recently every US broker accepted payment for order flow (even Vanguard did for options). Only Robinhood gave you back the money in the form of free trade
by kasey_junk 5y ago
Until recently every US broker accepted payment for order flow (even Vanguard did for options). Only Robinhood gave you back the money in the form of free trades. Thats to be commended.
Payment for order flow is a complex topic, mostly because the incentives are tricky, but at the end of the day, unless you are doing gigantic block trades (which you’d hire a specialist to do) you are almost certainly paying less in slippage with PFOF than you are in fees.
- jmyeet 5y agoYou are mistaken. Other brokers also sold order flow [1] but not all. [1]: https://www.investopedia.com/terms/p/paymentoforderflow.asp https://www.investopedia.com/terms/p/paymentoforderflow.asp
- kasey_junk 5y agoI’m sorry I’m not sure what you think the link says but it doesn’t contradict me. I did a manual audit of the top 10 US brokers in 2019 and all of them participated in PFOF. The only caveats we’re that IB let you pay to opt out and Vanguard only engaged in PFOF in options. Every other broker I looked at used PFOF. Admittedly there could have been small brokerages that didn’t but it was such a small percentage I didn’t look.