[nowherebeen]

There aren’t offering anything new and even frontrun their customers. And with the GameStop fiasco, I think a lot of people realizes it was a bad business model. I don’t think they will be able to recover. It will drop even more if a recession ever hits.

[nly]

They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way.

If both market maker A and market maker B offer the same price but B is going to pay them slightly more than A for your order, then they can legally route your order to B.

Many brokers do this now.

Front running is different entirely. For example, if you were about to buy a load of stock, front running would be Robinhood buying in before you, waiting for your order to clear the price level, and then selling a few ticks higher.

[NovemberWhiskey]

>They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way.

I really have most serious doubts about the idea that you can simultaneously get paid for order flow and deliver on your best execution obligations - the payment for order flow literally comes out of missed price improvement opportunities for the customer. FINRA seems to feel the same way and fired a warning shot over the bows last year: https://www.finra.org/rules-guidance/notices/21-23

[qeternity]

> and even frontrun their customers.

Oh ffs no they don’t.

[metadat]

I thought RobinHood helped Citadel front run the orders?

See https://www.washingtonpost.com/business/2021/01/29/robinhood...

[ac29]

Payment for order flow is not front running (which is illegal).

[mushbino]

What is the order flow used for?

[colinmhayes]

Citadel believes that they are less likely to lose money when they fill orders from retail investors. They're just paying for access to rubes, basically a finders fee.

[lupire]

The front running is instead of a transaction fee. Customers have to pay for the service somehow.