Direct Access Brokers that will not sell your Order Flow to HFT

Quote from WinstonTJ:

When you say "Ask GS why they receive PFOF" it sounds like "PFOF" is a noun, as if I could go to Whole Foods and pick up some PFOF for dinner tonight. You don't receive "PFOF" you either receive the order flow or you receive the money (in exchange for the order flow). Please get it right because your posts are confusing and nonsensical.

You need to separate out the money from the order flow because they are two totally different issues. You have an ax to grind and that's obvious but you should at least understand what you are talking about rather than use an acronym or buzz phrase over & over as if it is the only issue in the world.

To be technical GS proper does not receive any order flow. GSEC (Goldman Sachs & Co is a TOTALLY DIFFERENT BUSINESS than Goldman Sachs Execution and Clearing) on the other hand does receive order flow. I don't know the numbers but I would venture a guess that GSEC receives order flow that they both pay for and that they don't pay for.

From personal experience I can say that GSEC does a very good job and their execution is usually excellent - after all they are an execution and clearing company.
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Now, you're just being deceptive and picking apart phrases of speech for no legitimate reason. The real reason is that you don't have a legitimate argument, as your whole position is based on defending the current market structure.

You don't have a real position.

The proper Industry phrase is Payment for Order Flow, not Money for Order Flow. No one uses the phrase "Money for Order Flow", and you should know this.


Yes, GSEC is a subsidiary of GS that happens to receive Payments for Order Flow based on routing customer orders. GSEC will not take PFOF for routing orders for their internal GS affiliates (GS wealth management and proprietary trading divisions), so effectively it is GS that benefits.

Your statements are composed of nothing more than mindless rhetoric.

Maybe you should try a Trader Joe's analogy in the next post.
 
I fail to see what the problem is with brokers selling order flow to HFT - as long as your fill is at BBO.

If brokers didnt sell order flow, they would have to increase commissions instead. Would you rather pay higher commission and a worse BBO? (HFT keep BBO tight)

BTW, Interactive Brokers DO sell order flow to HFT. The firms name in Timber Hill as I expect has already been pointed out.
 
Quote from TheBlackHand:

I fail to see what the problem is with brokers selling order flow to HFT - as long as your fill is at BBO.

If brokers didnt sell order flow, they would have to increase commissions instead. Would you rather pay higher commission and a worse BBO? (HFT keep BBO tight)

BTW, Interactive Brokers DO sell order flow to HFT. The firms name in Timber Hill as I expect has already been pointed out.
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That is exactly my point. There is no issue since you the customer (or retail customer) have the choice whether to submit directed orders or to allow your broker to fill your order as they chose. If you waive your right and give your broker the choice then what is all the complaining about??? Seems foolish to complain about a choice you made...

In the past the brokers were taking a long time to fill your order by essentially shopping it around from HFT to HFT. These days it is all very quick and with price improvement it isn't that big of a deal at all. Even if price improvement is discounted down to $0 at a minimum you know that you can get the price of the NBBO (or better).

I know a lot of people that are paying upwards of $65-$80 per ticket charge at traditional brokers. I'm sure that would be the normal situation if brokers couldn't sell order flow. I don't think most people understand that.

Quote from MRBRETTONWOODS:The proper Industry phrase is Payment for Order Flow, not Money for Order Flow. No one uses the phrase "Money for Order Flow", and you should know this.

...rhetoric.
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Speaking of rhetoric, maybe you should try reading comprehension before you fire off posts like that.
 
Quote from WinstonTJ:



Speaking of rhetoric, maybe you should try reading comprehension before you fire off posts like that.
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If you weren't so inconsistent, maybe your position would be made more clear. As it stands, you don't have an actual position.



An interesting fact: Back in the 1990s, Bernard Madoff as Chairman of the Nasdaq was one of the main lobbyists to keep PFOF legal.
 
Quote from MRBRETTONWOODS:

If you weren't so inconsistent, maybe your position would be made more clear. As it stands, you don't have an actual position.

An interesting fact: Back in the 1990s, Bernard Madoff as Chairman of the Nasdaq was one of the main lobbyists to keep PFOF legal.
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Not taking sides here, but, do you have a securities license?

I ask this because a lot of the questions you're asking and claims you are making are addressed in depth per a series 7 or 56 license.

I think Winston has explained the issue quite effectively. He is not being inconsistent at all, in fact, he is doing a good job balancing the regulatory versus free market debate.
 
Quote from WinstonTJ:

That is exactly my point. There is no issue since you the customer (or retail customer) have the choice whether to submit directed orders or to allow your broker to fill your order as they chose. If you waive your right and give your broker the choice then what is all the complaining about??? Seems foolish to complain about a choice you made...

In the past the brokers were taking a long time to fill your order by essentially shopping it around from HFT to HFT. These days it is all very quick and with price improvement it isn't that big of a deal at all. Even if price improvement is discounted down to $0 at a minimum you know that you can get the price of the NBBO (or better).

I know a lot of people that are paying upwards of $65-$80 per ticket charge at traditional brokers. I'm sure that would be the normal situation if brokers couldn't sell order flow. I don't think most people understand that.



Speaking of rhetoric, maybe you should try reading comprehension before you fire off posts like that.
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Indeed.

I guess it's just good ol' HFT bashing. After all, it's easier to blame something else when things go wrong.

I did chuckle at the $65 a ticket remark. Good to see the old school are alive and kicking still! Shucks - if they can still make money with those fees, they must be pretty good. The only guys I know who pay that are doing institutional size.


On a slightly different stance, aren't there schemes with some exchanges now that pay to take liquidity and charge to post it (could just be options exchanges, but I hear Bats or Chi-X are doing similar)? Kind of normal fees but in reverse. I imagine you have to be a registered trader at the exchange to be eligible, but if you're posting size, why not?
 
Quote from TheBlackHand:

Indeed.

I guess it's just good ol' HFT bashing. After all, it's easier to blame something else when things go wrong.

I did chuckle at the $65 a ticket remark. Good to see the old school are alive and kicking still! Shucks - if they can still make money with those fees, they must be pretty good. The only guys I know who pay that are doing institutional size.


On a slightly different stance, aren't there schemes with some exchanges now that pay to take liquidity and charge to post it (could just be options exchanges, but I hear Bats or Chi-X are doing similar)? Kind of normal fees but in reverse. I imagine you have to be a registered trader at the exchange to be eligible, but if you're posting size, why not?
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I wasn't kidding at the $65/ticket. I have no idea if they were online or voice (voice meaning they called the broker). Don't ask me how it ended up on my lap but I was asked to alphabetize a stack of duplicate statement letters recently. The vast majority were standard retail accounts but the higher net worth stuff (guys who had high 6 or 7 figures) were all paying well over $50 a ticket plus additional fees & surcharges... I guess if I was their age and had several 6-7 figure accounts across different banks I wouldn't really care what the ticket charges were.

RE fees & being inverted, The guys on the floor of the NYSE get paid to add and take liquidity. They get paid to provide just like everyone else but also since they get to sell the execution data back to the exchange they do get paid to take. A lot of exchanges are trying crazy things with reversing fees, etc. to try and either be different or cater to a certain market.

I don't understand it fully but what is the difference between paying to join a dark pool and paying an exchange to post size? Are they assuming that whoever is posting has toxic orders and they need to bribe people (by paying them) to take the other side of those trades? I know some bigger banks wrestled with that exact scenario for a while.
 
Quote from Mike805:

Not taking sides here, but, do you have a securities license?

I ask this because a lot of the questions you're asking and claims you are making are addressed in depth per a series 7 or 56 license.

I think Winston has explained the issue quite effectively. He is not being inconsistent at all, in fact, he is doing a good job balancing the regulatory versus free market debate.
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I am not registered with FINRA or affiliated with any exchange. Anyway, it's not as if you'd be able to substantiate the credentials of a non-premium forum member who claimed to have XYZ in his possession. This is, after all, an anonymous internet forum.

Most of the questions I have made have been in rhetorical form. There are always technical legalities.

I don't see how one could argue that there is even a "free market" in the US, given what we've seen in the past few years, but that's another story.
 
Quote from MRBRETTONWOODS:

I am not registered with FINRA or affiliated with any exchange. Anyway, it's not as if you'd be able to substantiate the credentials of a non-premium forum member who claimed to have XYZ in his possession. This is, after all, an anonymous internet forum.

Most of the questions I have made have been in rhetorical form. There are always technical legalities.

I don't see how one could argue that there is even a "free market" in the US, given what we've seen in the past few years, but that's another story.
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In my experience, people are quick to take issue with something based on "gut feel" and a lack of information. Some aspects of PFOF and internalization "feel" wrong. In this case, you might be missing some information...

If that's the case, I urge you to pick up a series 7 manual and skim through the section on exchanges and broker-dealers. Its been too long and I don't remember most of it, but, the fact is there are significant rules in place that, no matter what, if followed, will *always benefit the customer*. Always.

Now, whether or not the rules are being bent in favor of certain HFT firms, I don't know... Winston knows what he's atalking about here way more than I do. But, internalization and PFOF are very strictly regulated and I would speculate that no firm would ever intentionally break the rules since the consequences would essentially be lethal if word got out. If you have examples please post them.
 
Quote from MRBRETTONWOODS:

This is coming from the degenerate who has contracted himself multiple times. What a track record. Go find yourself a hobby.

Your posting history on this thread is available for the entire world to see. You can try to save face now, but most of the damage has already been done. Too bad.
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bretton woods is broken.
 
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