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>Research has been done showing that different brokers split the price advantage differently. Robin hood, IIRC was one the worse side, allocating 80% of price a
by cool_dude85 4y ago
>Research has been done showing that different brokers split the price advantage differently. Robin hood, IIRC was one the worse side, allocating 80% of price advantage to PFOF, leaving only 20% to the customer. But the customer is still better off than paying the public exchange rate.
But why should Robinhood or whoever else get part of the 10 cents that the algo is offering me, the little ol' retail investor? Just because they're in position to gobble some of it up without me knowing?
- thefreeman 4y agoBecause they built the app you are trading on, made the agreements with the HFT, and are facilitating the trade?
- brookst 4y agoBecause they’re offering you “free” trades and making their money from their cut of that price advantage rather than charging you $5? I don’t use Robinhood, but I don’t see anything wrong with that pricing model. Prohibiting it would be equivalent to banning no-fee trades for small time retail investors. It would be like banning ad-supported business models. Well, on second thought…
- affyboi 4y agoI mean because you’re using their platform and these are the terms - people have always been free to use other brokers, like the ones that charged commission. Regulations also mean that you have to get NBBO or better so your fill price is never worse than the market