Payment For Order Flow (PFOF) is the practice by which retail brokers are paid by high-speed trading firms for their customers' orders. Another form of PFOF is rebates that stock exchanges pay for brokers and high-speed trading firms to send their resting orders to the exchange. Both of these practices create conflicts-of-interest where a broker’s financial interests are at odds with their duty of best execution. Order routing inducements such as these should be ended.
There are several problematic issues wrapped up in PFOF. These issues include:
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