SEC is considering creating order by order competition for retail.

Each retail order is pre set to go to one of the wholesalers even if (other wholesalers, or other participants) are willing to give a better price.

What does it mean for investors, wholesalers and brokers? 1/n

https://twitter.com/aosipovich/status/1533901040453566469

There are two ways the @SECGov could go. 1. Get all the retail flow to interact in the public exchanges 2. Create a segmented marketplace where MMs and other investors can provide liquidity just to retail market order flow at a better price competitively
2/n

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:

https://twitter.com/TheProblem/status/1501978119460249608

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

This order seems to be misleading. By design dark ping fill rate will be notably less than exchange fill rate and that does not make it worse to ping a dark pool prior to an exchange. By pinging dark first The client may receive better prices, more size at a lower impact..

https://twitter.com/dlauer/status/1501226200936685571

Not removing the exchange quote can be beneficial for trading a large parent order when there is more behind. If you receive 15% fill rate in dark that does not mean that 85% of the times that you did not get a fill in dark, you wont get a fill in exchanges afterwards..

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..

The wholesalers just can’t get their stories together. Their arguments shift ever 5 seconds and circular. Here are the top 10: 1. Retail brokers don’t get mid from exchanges because that would mean the rest of flow would be more toxic for wholesalers and they wont get the same price improvement

@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”