[zegerjan]

As retail investor there's great downsides to market makers too. The prime example; the true price of the underlying is obscure when executing an order. Where the whole point of the market is to create price efficiency. When anyone creates a limit order in the middle of the spread it's often filled instantly, but not market moving. Other investors now do not have the same information as the market makers have who filled the order. So either they should publicly log each trade so all brokers can show what the true last price was and change in positions with that, or PFOF creates information dissymmetry. Markets should be transparent, and if you make money through obscurity that's against what the market is for.

Another problem is that market makers tend not to provide liquidity when it's most needed; when markets are most volatile and unpredictable. The GME spreads for example were very wide. When the market is very volatile they tend to increase the spreads until the market is predictable (as far as they can be) again. Effectively they're like bad insurance companies: When you need them they're nowhere to be found, when you don't they'll gladly take your money.

It's for everyone involved, except ones that make money of PFOF plus the market makers, probably better to have transparent inefficiency in pricing, then have defuse pricing which in some cases might be in your favour.

[pgwhalen]

You describe two phenomena that appear to be true of every two sided market ever, namely:

- One can typically get a better price than what is displayed or quoted

- The price of liquidity is higher when markets are volatile

While yes, nobody would argue those things are good, can't they just assumed to be the nature of markets? There doesn't appear to be anything about the micro structure of modern capital markets where HFTs thrive (stocks, some options, FX, etc.) that makes these particularly bad.

[smabie]

Public exchanges provide trade feeds so anyone can see the price of the fills.

[toufka]

But an increasingly large number of trades are actually done by the market makers themselves, "off exchange" or in "dark pools". And when more and more transactions are not done on "lit" exchanges, especially when systematic, this does hurt price discovery (and possibly other safe-guarding tools and analyses that come with that public and transparent data).