Thread by @mittalbestex

@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

https://twitter.com/cnbcfastmoney/status/1435721120158715905

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;

and b) They suspect that the goal of @SECGov is not to stop at banning PFOF rather it is to increase competition on an order by order basis by moving flows to market where everyone can access it. That again hurts their business model.

The argument that he is just looking out for his customers (i.e. @RobinhoodApp) is not a credible one. Let’s not forget that @VirtuFinancial also runs an agency institutional business and inst clients no doubt get hurt by not being able to access retail liquidity.

He goes on to say that his institutional clients are telling them that they are not affected by the internalization of retail flow. We talk to the same firms and lack of non-toxic liquidity due to their internalization is one of the biggest concerns they have (as it should be).

To say that institutions don’t give a damn (“who’s the plaintiff here”) while they are willing to pay 💰 PFOF for accessing the same flow- defies logic. He asks “who’s the plaintiff here”. Investors are the plaintiffs here!