[rdm70]

Multiple big market makers pay for order flow in the United States, which results in orders getting intercepted before they hit the public markets.

They are generally given some price improvement relative to the public BBO, so the argument is that customers filled via PFOF are better off.

However one second-order effect of PFOF which argues against this is that PFOF makes it less attractive for non-PFOF firms to participate on the exchange. Because small customer trades, which are generally low information content, have been filled off exchange, only the larger and riskier trades trade on the exchange. This causes spreads to be wider on the exchange than otherwise.

Some European exchanges have banned PFOF. I think these exchanges are working OK without it.

[SkipperCat]

No quarrel with the facts in your statement about PFOF. But why on earth are small low information traders even worrying about this? Are small order retail traders trying to score that extra .01 price diff? If you're not trading for a Wall Street fund, just buy and hold some decent ETFs or some quality stocks. Day trading is just a form of compulsive gambling and it's only guarantee is to underperform the SP500.