Payment for Order Flow

…And I maintain that the broader market architecture ensures that increased access overwhelmingly translates to predictable financial detriment for the working class. The system is funded by payment-for-order flow. It is built entirely around wholesalers executing high-frequency trades. And harvesting the data. Exactly. And most importantly, it is perfectly…

…That is a compelling point, though I would frame it differently. Consider PFF as a subsidy. It is remarkably akin to a free-to-use search engine. A search engine. Yes. A search engine relies heavily on backend advertising revenue, but the user gets a highly valuable tool at zero direct cost. It operates on the exact same structural principle. The backend pa…

…A fraction of a penny in price improvement does not negate the underlying incentive structure. Brokerages earn revenue purely based on volume. The more you trade, the more they make. And it gets much worse when you look at high-risk assets. How so? Well, researchers at Wharton analyzed this and found that two-thirds of all PFOF revenue comes from options ma…