Re:Robinhood is facing nearly 50 lawsuits over GameStop frenzy
by croon on Wednesday March 03, 2021 @07:45AM
(#26327621)
Isn't the not-so-secret secret that every other brokerage also sells flow [0], but still charges the end user?
Making Robinhood just less bad than the rest.
[0] https://piper2.bluematrix.com/sellside/EmailDocViewer?encryp...
Re:Robinhood is facing nearly 50 lawsuits over GameStop frenzy
by mlrtime on Wednesday March 03, 2021 @11:57AM
(#26331121)
When RH sells to a internalizer for payment (PFOF) it is always inside the NBBO (National Best Bid and Offer) which is always going to be a better price than what you would receive on a public exchange AND there are 0 commissions.
Re:Robinhood is facing nearly 50 lawsuits over GameStop frenzy
by rcxdude on Wednesday March 03, 2021 @12:35PM
(#26331726)
Exactly. It's not the user paying for it, it's whoever would have been on the other side of the trade without the pay-for-flow.
Re:Robinhood is facing nearly 50 lawsuits over GameStop frenzy
by pests on Thursday March 04, 2021 @03:43PM
(#26347999)
Right, because that other side of the trade is purposefully trading against this bought flow thinking they can earn more opposed to competing with institutionalized investors.
Re:Robinhood is facing nearly 50 lawsuits over GameStop frenzy
by astura on Wednesday March 03, 2021 @08:27AM
(#26327988)
Isn't this something almost all brokerages do?
https://efipm.medium.com/zero-commission-brokers-selling-ord...
Robinhood has normalized pay for flow, a service that is literally shaving cash off each order in exchange for “free trading”. Pff can only generate net revenue by making traders pay more per trade than actual best execution, which Robinhood is suppose to be legally required to deliver. The SEC in the 90s and 2000s thought the practice amounted to middle manning traders and should be illegal.
Basically: Robinhood gives stock purchases to a third party, who pays Robinhood for each transaction in “rebates”. If you have a free trading account other than fidelity, you are paying insane transaction fees that are hidden from you by the pff. It’s middle manning, and Robinhood is paid to enable it.
Not a fall guy, just not all the guys that need to fall.