does hidden order that provides liquidity receives rebates from exchange?

[jeb9999]

Not in all cases. Who is going to buy a buy order that is a limit order at the current bid or a sell order at the current offer? Why would someone pay for an order they can hit for free?
If they like giving up the spread that is fine, they can do that all day long for all I care. You don't do much actually trading, do you?

You clearly don't understand how PFOF outfits like Citadel operate.

A buy order that is a limit order at the current bid or a sell order at the current offer is quite valuable to Citadel.

Citadel gets to lean on those orders. That is why when a stock is 100.00 bid and 100.01 offer you see order fills at 100.0001 and 100.0099.

Citadel's risk is limited to only .0001 on the buys and sells.

 

[tradegoodstocks]

The price on your order fill.

I have written software to measure this by sending identical orders simultaneously to two different brokers. One order pays commissions and the other is "free". The "free" orders that don't go directly to an exchange would always get a poorer price on the fill and the net result was they would cost significantly more.

So it's not that it's not "free" it's actually more expensive. No one should be surprised by the fact that hidden costs end up costing more.

Can you please elaborate on your test? Did you use market or non-marketable limit orders?
With the cheapest commission based broker that I know of, IB, orders routed to the major exchanges are about $0.0067 per share in commissions and fees - most of it are the exchange fees. For are liquid stock with $0.01 bid/ask spread this could not possibly beat a $0 commission order filled at NBBO at the prevailing bid or ask, could it? The round-trip cost in commissions alone would be 2 * $0.0067 = $0.0134 per share (more than the round-trip indirect cost of $0.01 for commission-free fills at NBBO), even if BUY market orders were filled at the bid and ASK market orders at the ask (very unlikely).

My use case scenario is a small retail order.