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This isn't true. The money gained by selling the trade to market makers is small, and can easily be much less than the commission. The commission is the cost of
by cynicalkane 13y ago
This isn't true. The money gained by selling the trade to market makers is small, and can easily be much less than the commission. The commission is the cost of doing business. Regulatory compliance and information technology ain't free.
Maybe you mean the marginal value of a trade is less than $0, but I'm not convinced that's true ether.
However, AFIAK the rest of the information in this post is accurate.
- sseveran 13y agoThe Tx costs of a trade will probably yield a rebate but they will need to move significant volume to generate enough revenue to cover their other costs. There would be no commission if they sold their flow. The only other way to make money here is to internalize even further and give bad fills or jack up other fees.
- murbard2 13y agoSure, the marginal cost. You do need to have a staff, compliance, etc.