61–70 of 141 posts
Wonder how Robinhood is going to survive a potential dilution of payments for orderflow if these proposals become reality.
I thought the real value of Robinhood was that it was a substantial source of information about retail traders for its parent company.
Earlier quoted context omitted.
As a retail investor, I’d rather have PFOF and free trading instead of paying $5 to $10 a trade which is more expensive than spread improvements. That’s what PFOF has brought to retail investors. It’s not like retail investors was ever put onto the public exchanges prior to robinhood and PFOF, they were sent to dark pools for institutional investors to trade against but retail investor never got the benefit.
PFOF isn't gigantic revenue driver for many retail brokerages, including some that offer zero commission trading (like Schwab). Robinhood may have started the price war while making most of its money from PFOF, but you can have low to zero commission trading without PFOF. The payments per share tend to be extremely small - on most symbols the broker isn't making $5-10 per trade from the MM, for reasonably sized trade…
From Levine: "Payment for order flow sort of created the zero-commission retail-brokerage model, but it’s not really necessary anymore. You can run a profitable retail brokerage on net interest margin, without charging for trades at all." So what everyone should be complaining about is not PFOF, but "net interest margin". In other words everyone should be complaining about the brokers not paying enough interest on th…
This confused me at least: do people keep cash in their brokerage accounts? Is this an American thing (limey Brit here). I transfer cash in once I've decided to trade and the brokerage usually holds it for a max of a day or two until the trade actually executes (say I am buying an index fund where orders today are executed tomorrow). The only time there has been cash for longer than that was when I know I needed it (…
I had no idea that, until the recent round of “innovation”, the retail investor traded only with other investors in the brokerage consumer list. I always thought the brokerage is just facilitating access to the actual trading desk where the trade is put up for anyone to pick up. Am I right in understanding that Robinhood took this and abused it by turning itself and its customers as the source for high frequency trad…
"Robinhood makes money in a number of ways, notably through a system known as payment for order flow. That is, Robinhood routes its users' orders through a market maker who actually makes the trades and compensates Robinhood for the business at a rate of a fraction of a cent per share." [0]
The market maker is usually a big player like Citadel. And with this information, they can front-run the market.
[0] https://www.investopedia.com/articles/active-trading/020515/...
How about get rid of obfuscated monetary bullshit like darkpools first
What’s wrong with dark pools? The name is meant to conjure up some evil mental image, but it’s just two or more parties that want to offload / onload some stock without impacting the market. It’s no different than telling your neighbor you’re willing to sell your house for $X without publicly listing it.
I don’t think there is an equivalent public reporting mechanism for private “dark pool” transactions of financial instruments.
Another way to say “without impacting the market” is “denying the market information it needs to set prices accurately.”
As someone who used to work in execution brokerage, this rule change seems on net to be good news for retail investors and bad only for folks like citadel and robinhood.[1] In the wake of flash crash there was a fair amount of research suggesting that rolling auctions (rather than continuous order matching) are net positive for almost everyone except HFTs who exploit market microstructure. In my view they should also…
As someone who used to work in execution brokerage, this rule change seems on net to be good news for retail investors and bad only for folks like citadel and robinhood.[1] In the wake of flash crash there was a fair amount of research suggesting that rolling auctions (rather than continuous order matching) are net positive for almost everyone except HFTs who exploit market microstructure. In my view they should also…
Earlier quoted context omitted.
What does truth searching mean, that’s an interesting term.
HN comments (laypeople in general) tend to make very confident and very wrong comments on market structure
Yes, it's annoying. From conspiracy theorists to supposedly smart people with PhD's, I'll catch them in a fiction. "You just made all of that up," I'll say, to which they reply with handwaving and equivocation. Why are we so reticent to be comfortable with our own ignorance and hold our tongue?
As someone who used to work in execution brokerage, this rule change seems on net to be good news for retail investors and bad only for folks like citadel and robinhood.[1] In the wake of flash crash there was a fair amount of research suggesting that rolling auctions (rather than continuous order matching) are net positive for almost everyone except HFTs who exploit market microstructure. In my view they should also…
IMO the whole system needs to be overhauled. With today's tech there is no reason that trades can't be immediate, the fact that it takes 3 days to "settle" a trade is absolutely beyond ridiculous. That and let's also get rid of any special treatment for the investment industry that retail traders don't have (for example as a retail trader, I can trade in the pre or post market but if I do my trades aren't guaranteed…