Pay-per trade

摘要

FROM ONE perspective, retail stock traders have never had it so good. There is fierce competition among brokers, including the likes of Charles Schwab and Fidelity, for their business. This broke out into an all-out price war in 2019 when these firms cut stock-trading commissions to zero, four years after Robinhood, a startup promising commission-free trading, came on the scene. Retail participation in stock trading is at a new high. This happy picture is somewhat muddied by the practice of payment for order flow (PFOF). Instead of charging users for each trade, brokers are paid by marketmak-ers to direct users' trades-or "order flow"-through them. Marketmakers take small profits on the difference between the price that a broker's user pays and that at which a share is offered for sale in the market. The mania around GameStop, a seller of video games, has put the practice, and its practitioners, in the spotlight.