Sounds like another SoftBank deal. Private Equity capturing all the equity, only for it to be dumped on the public market and have its value decline precipitously.
Etrade's market cap: $11.8 billion. Charles Schwab: $44.66 billion.
Etrade's market cap: $11.8 billion. Charles Schwab: $44.66 billion.
1. It has a massive userbase that most likely doesn't have exposure to the larger financial world
2. They have a large enough user base, where they can route orders through dark pools and HFTs. It's good for the user because contracts have a narrower spread and they can give the user the price they saw when they sold it (vs Schwab, which gives you direct access to the market so you need to set limits)
3kinda. Their App is quite good compared to Schwab.
I'm not sure if either 1 or 2 makes them worth 12 billion, but they did get me free trades on Schwab which was nice.
EDIT. Removed misleading example
Take a look at this link. Trade execution improved in the UK when they made PFOF illegal. https://www.cfainstitute.org/en/advocacy/policy-positions/pa...
Robhinhood cancels decision to enter UK. https://www.cnbc.com/2020/07/21/robinhood-scraps-launch-of-i...
What it implies is price changes with payment for order flow the order won’t executed and is requoted, whereas where it’s banned there’s no incentive to cancel so you get the quote.
That doesn't mean they're making money at your expense. Random hn comment that explained it better than I could: https://news.ycombinator.com/item?id=23774476
https://www.jstor.org/stable/2962317?seq=1
This link describes what is going on.
This happens all the time in forex markets. During lower volume periods, they go after the stop losses. Only market where this doesn't really happen is futures because all trades occur on a centralized exchange.
My recommendation switch to a broker like Tradestation and route your trades through the IEX exchange to avoid getting duped.
This is not quite accurate. The user doesn't get a better price from a dark pool than they would in the market. They get filled at the market price. It's illegal for it to be higher and Citadel/Robinhood aren't going to leave money on the table by filling it cheaper.
Citadel is willing to pay Robinhood for their order flow because it is less risky and therefore more profitable because Citadel won't end up on the wrong side of a trade. Robinhood uses this money to fund their business and takes any excess as profit.
This is sort of true and sort of not. For an individual trader, it's mostly true.
The law says orders should execute at no worse than the national best bid or offer (NBBO). The NBBO is the best marketed bid and marketed offer. It does not include orders on a dark pool.
A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do.
Client orders are protected in this scenario by FINRA Rule 5320 - they can't trade ahead of client orders. https://www.finra.org/rules-guidance/rulebooks/finra-rules/5...
That’s front running. It is illegal.
Market making is done at risk. Citadel fills the client’s order at the NBBO out of its own book. It then turns around and sells stock at the best price it can find, which it hopes will be better than NBBO. (It may not!) This is market making and it’s quite legal.
https://www.institutionalinvestor.com/article/b1m2p1cv68bx56...
https://markets.businessinsider.com/news/stocks/robinhood-fi...
There's nothing concrete that I can cite, but up until recently they have been doing wonky things with order execution.
They sell your order flow as well.
[1] - https://fortune.com/2020/03/09/robinhood-crash-third-time-st...