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WHAT IS PAYMENT FOR ORDER FLOW?
Payment for order flow is essentially the practice of a PFOF broker routing orders through a series of market-making firms, instead of directly to a stock exchange. 1/14
Payment for order flow is essentially the practice of a PFOF broker routing orders through a series of market-making firms, instead of directly to a stock exchange. 1/14
The broker gets paid by these firms for redirecting trades to a particular market maker for completion. These companies pay a small amount to participating brokers and complete the order.
2/14
2/14
The market makers gain from this flow of trades in two ways. First, as market makers, they are typically able to sell at the (higher) ask and buy at the (lower) bid.
3/14
3/14
WHAT IS PAYMENT FOR ORDER FLOW?
Payment for order flow is essentially the practice of a PFOF broker routing orders through a series of market-making firms, instead of directly to a stock exchange.
Payment for order flow is essentially the practice of a PFOF broker routing orders through a series of market-making firms, instead of directly to a stock exchange.
The broker gets paid by these firms for redirecting trades to a particular market maker for completion. These companies pay a small amount to participating brokers and complete the order.
1/11
1/11
The market makers gain from this flow of trades in two ways. First, as market makers, they are typically able to sell at the (higher) ask and buy at the (lower) bid.
2/11
2/11
