Hacker News Reader

TOR_USER_01on SEC set to propose rules that would squeeze stock-market middlemen

They will make the market:

> ...the company has quietly been laying the groundwork to become a standalone market maker,

> One way to reduce its reliance on PFOF is for Robinhood to actually match its own order flow instead of selling it to other brokers, company executives said. They even hinted during the roadshow meetings with investors that they too will be looking at getting into the business…

https://www.foxbusiness.com/markets/robinhood-ipo-twist-busi...

TOR_USER_01on SEC set to propose rules that would squeeze stock-market middlemen

Another argument against PFOF is that brokers could (and Robinhood has been caught doing it) be incentivized to route orders to the highest PFOF rather than executing at the best real price.

TOR_USER_01on SEC set to propose rules that would squeeze stock-market middlemen

> Robinhood to pay $65 mln fine to settle SEC charges of misleading customers

> The SEC charged the company with failing to inform customers about payments it received from trading firms to route customer orders through them, a move that resulted in customers paying higher prices to execute trades.

> Robinhood customers' orders were executed at prices that were inferior to other brokers' prices," the SEC found.

https://www.reuters.com/business/finance/robinhood-pay-65-ml...

TOR_USER_01on SEC set to propose rules that would squeeze stock-market middlemen

Matt Levine:

> The customers think they have no cause for complaint, because they did better than the NBBO. The whole thing is an institutional equivalent of retail payment for order flow: The partner firms fill the customers at a better price than the NBBO, make some profit for themselves, and kick back some of it to the broker (Coda).

https://www.bloomberg.com/news/newsletters/2021-09-23/money-...