Money Stuff - Payment for Order Flow
From 5 February 2021: Okay let’s do payment for order flow again, because people are talking about it and that always stresses me out. Here’s an intuitive description of how it works. A million people come to a broker to trade GameStop Corp. stock. Half of them want to buy shares, half of them want to sell shares. One share each, all using market orders, all at precisely the same time. The stock exchange has half a million shares of GameStop available for sale at $58.25, and orders to buy half a million shares for $58. The broker could send all of its customers’ orders to the stock exchange, where the buy orders would be filled at $58.25 and the sell orders would be filled at $58; the broker would pay the exchange a small fee for executing these orders. ...
