Namely, should a brokerage—especially one like Robinhood that brands itself with an anti-Wall Street Everyman gloss—be selling its customers’ trades?
What exactly is the point of this article, other than trying to stir up anti-Robinhood sentiment?
Relying on PFOF/external execution is now a bad thing?
Is the author advocating to do away with PFOF/external execution?
What's the proposed alternative, because it seems like that would take us to a full circle. In previous years, the brokerage dealing directly to the clients was fraught with problems: conflict of interest between the brokerage and their clients because the brokerage holds offsetting client positions, and the market risk held by the brokerage.
Auditing "best execution" is pretty straight-forward for a brokerage and regulators (really anyone with the data). If Brokerages are "cheating" and dealing against their clients best interests, then that's exactly the role of regulators.
(This comment was originally a reply to "Robinhood makes most of its money selling customer orders (2020)" https://news.ycombinator.com/item?id=25946626, but we've merged it into the main thread.)
What's the proposed alternative, because it seems like that would take us to a full circle. In previous years, the brokerage dealing directly to the clients was fraught with problems: conflict of interest between the brokerage and their clients because the brokerage holds offsetting client positions, and the market risk held by the brokerage.
Auditing "best execution" is pretty straight-forward for a brokerage and regulators (really anyone with the data). If Brokerages are "cheating" and dealing against their clients best interests, then that's exactly the role of regulators.