3 ms·

I'd also like to know that! I have some ideas, from less shady to more: - Payment for order flow - Interest on sweep accounts - Upsell to more profitable pro

I'd also like to know that! I have some ideas, from less shady to more: - Payment for order flow - Interest on sweep accounts - Upsell to more profitable products (first party ads) - Payment for order flow, but structure your orders so the spread is really attractive to market makers (unfortunately you might be doing this unintentionally) - Third party ads - Sell your customers' data There's also the possibility of not doing any of these, losing money in the name of customer acquisition, then selling to someone who will monetize it better. I find it a bit rude to ask a company their exact business plan, even on Launch HN, but maybe I could ask - are there any of these monetization strategies you disdain and would specifically rule out? And if you do have one or more of these in mind, is the $1 really important, or is that a marketing trick where people wouldn't trust you if it was free?

fisherjeff 2y ago
I’d think some combination of all of the above, but would love to know how valuable the order flow is from an indexer – it’s gotta be worth way less than from, e.g., Robinhood right?
- dmurray 2y ago
  I'm not sure that's true. The market-wide spread for SPY is smaller than the implied spread from all the 500+ components. If you request your market maker for individual prices on the components (or 470 of the components plus 30 stocks substituted for tax loss harvesting purposes), they have an obligation under NMS to quote at least as tight as the individual components, but that could still be wider than they would on the index. If you have a perfectly competitive market, you can go to all the market makers, and their spread will approach what they would have quoted on SPY. But if it's not perfectly competitive, and you ask your preferred market maker to quote a wider price and split the difference (via a cash payment to you) versus what she would have quoted on SPY, you can both make a few pennies for every share traded.
vpribish 2y ago
Also collect and keep the stock lending fees

fisherjeff 2y ago

I’d think some combination of all of the above, but would love to know how valuable the order flow is from an indexer – it’s gotta be worth way less than from, e.g., Robinhood right?

dmurray 2y ago
I'm not sure that's true. The market-wide spread for SPY is smaller than the implied spread from all the 500+ components. If you request your market maker for individual prices on the components (or 470 of the components plus 30 stocks substituted for tax loss harvesting purposes), they have an obligation under NMS to quote at least as tight as the individual components, but that could still be wider than they would on the index. If you have a perfectly competitive market, you can go to all the market makers, and their spread will approach what they would have quoted on SPY. But if it's not perfectly competitive, and you ask your preferred market maker to quote a wider price and split the difference (via a cash payment to you) versus what she would have quoted on SPY, you can both make a few pennies for every share traded.

vpribish 2y ago

Also collect and keep the stock lending fees