Discover and read the best of Twitter Threads about #pfof

Most recents (3)

I quite liked this debate between @jonstewart and WSJ journalist @Spencerjakab who disagreed with @TheProblem episode about the APE movement and #PFOF

His point: Retail should know better than to trade on platforms like @RobinhoodApp and just invest in index funds.

My take:
This seems to be a popular opinion for people defending our market structure and putting it back on retail for being stupid enough to trade in the first place.

I am a huge fan of investing in index funds but I also find this POV quite condescending and strongly disagree with it
Index funds also do a lot better than active funds on average. Nobody tells the active funds to not trade in stock markets.

Leveraged funds lose money all the time (e.g. Archegos capital, LTCM) - noone says that they should stop investing.
Read 8 tweets
R-NBBO (RETAIL NBBO)

A PFOF ban will be too politically charged and will not resolve the real issue. Here is an alternative market structure proposal.

Create a Retail NBBO instead.
1. Allow exchanges to create separate order books for retail flow. Each limit order books serves a segment :For example Robinhood/Schwab etc can be retail1, IBKR retail2 etc..
2. These categories only apply to firms sending Market Orders and Marketable Limit Orders. Exchanges to publish markouts at 1 sec,5 Sec, 30 Sec, 1 Min, ..5 Min for flows from each segment to encourage liq provision.
Read 16 tweets
@MelissaLeeCNBC keeps asking Doug “what about the price distortion in NBBO” that you are comparing yourself against because a huge portion of volume does not even make it to the exchange. She can not get an answer! Instead he frames his own questions and answers them. #PFOF
That’s the most inconvenient “fact” of this mkt structure and it’s hard to run away from it. @GaryGensler understands that and points out in his interview with @avibarrons that measuring against NBBO is like “measuring the height of the children, I leave part of the ruler out”
Interesting to hear @Dougielarge say that banning PFOF will only increase their profitability. Then why lobby against it? I can think of two possibilities: a) If PFOF goes away the large retail brokers may figure out other ways to monetize it which does not involve wholesalers;
Read 7 tweets

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