[lxgr]

I see how it can make sense on the settlement layer, but that's of absolutely no relevance to individual investors, which is who Robinhood are targeting.

In the EU, as far as I remember most modern brokers let you buy shares with unsettled proceeds of others without restrictions; in the US, getting a margin account takes no effort at all and bypasses the freeriding rules too.

[NickNaraghi]

Unfortunately, Robinhood makes money by selling individual investor orderbook data to the big guys so they can front-run them

[lxgr]

Payment for order flow is not front running. The PFOF trader only gets right of first refusal on every trade; whether they take it or not, the broker is still obliged to execute the trade at NBBO or better.

It actually gets retail investors better prices than institutional or professional ones, since the counterparty can safely assume that there's "dumb money" on the other side of the trade.

That's not to say it's not controversial in some aspects, but it's not as simple a situation as you make it out to be.

Also, somewhat ironically, the front running risk on many decentralized exchanges is much higher due to MEV being a hard problem to solve trustlessly.