SEC Closes In on Rules That Could Reshape How Stock Market Operates

[TrailerParkTed]

retail traders that argue against pfof crack me up, there are plenty of brokers
that will let you rout wherever you want and you can pay your trading fees and
swim up stream all day long.

its nice to have the another option.

With options and fast stocks i have had DA brokers pierce the NBBO or trade through making me Top Tick or Bottom tick too many times to count. SUSQ and Citadel I cant recall over paying .70 because “Intelligent order” refused to provide the consolidated open.


Wasting a hour to challenge a $50 error not worth it.

 

[JackMorgan]

The real problem with pfof , is you dont get to interact with the dumb money very often

you know, like you guys

 

[VEGASDESERT]

The real problem with pfof , is you dont get to interact with the dumb money very often

you know, like you guys

jm likes to follow me around like a lost puppy looking for attention.

 

[JackMorgan]

jm likes to follow me around like a lost puppy looking for attention.

i thought you were following me.

 

[murray t turtle]

It all comes down to this IMO.

1) Is free commission important for you? Then go with the PFOF.
2) Is faster execution, eg. little to no slippage, more important for you? Then go for the full-commission trade.

%%
OK;
super liquid stocks/ETFs help also. And some times get positive slippage on those+ get low or no comission.................................................................................

 

[TheDawn]

Everybody is saying that the SEC is giving us retail traders a choice between "free" PFOF and commissioned trades. Where do you guys see that in the article? All it says is that it's going to propose all brokerages send our orders to the exchanges and be executed in an auction which we have no details of. Another thing it mentioned is that it will direct brokers to seek the "best executions" for retail traders. That's going to create the potential for the practice of what's called "A-B booking" in retail forex trading where the broker keeps two set of "books" for the clients and discriminate clients according to the profitability of the clients. If they see the client's account is profitable belonging to so-called "A book", they will send its orders directly to the liquidity providers which are big financial institutions (the equivalent of exchanges in stocks and options) but if the client's account is not that profitable belonging to the "B book", the broker will internalize the trade itself by trading against the client thus making money directly against the client. In the stocks and option's case, the orders I guess will be sent to the market makers to be filled.

To me this is a cop-out that's really not benefiting anyone. It's discriminating against the clients and at the same time against the market makers as well. Every single trader and/or market makers deserve the same chance at fair dealing and market participation regardless of their profitability. And least of all brokers shouldn't be the ones who make the decisions on how an order is to be executed. Their job should be to just disseminate our orders to be executed, period.

I don't understand why the SEC just can't ban the PFOF outright and make everybody trade against each other on the exchanges and have the exchanges operate like an open book with orders matching each other. It works for the futures and bonds market and in many countries for stocks and options. Why can't it work for stocks and options that have much trading volume in the United States? This is just perfect greed and once SEC is afraid to upset the hand that feeds it so it pushes the problem onto the brokers.

 

[TheDawn]

i thought you were following me.

You can see who is following you in your profile here on ET. And also if someone is following you, you will get a message telling you so too.

 

[cruisecontrol]

retail traders that argue against pfof crack me up, there are plenty of brokers
that will let you rout wherever you want and you can pay your trading fees and
swim up stream all day long.

its nice to have the another option.

That's completely moronic. Just because you can direct route does not mean you are suddenly living in a world where PFOF doesn't exist. Its existence costs you money no matter which "option" you choose.

 

[TheDawn]

Which is kinda odd, considering Canadians pay the highest banking fees in the world. Now THAT should tell you something.

Banking fees has nothing to do with commissions. If you mean commissions by saying "banking fees". Well I am sure that's still smaller than the potential profit that you've lost in the PFOF system or the potential losses that you could've saved if not in the PFOF system. And the worst of it is, you don't even know how much. That's the biggest problem.

I think maybe the first thing that Gesler should do is make all those MM's like Citadel disclose how much they've paid to the broker on each of the orders routed to them and for the broker to disclose what would be the price that the trader could've gotten for the order if it had been routed directly to the exchange and executed so we can see the difference. So far we only know the overall mechanisms and the pitfalls of the system but we still don't have the complete transparency as to exactly how much the PFOF is costing us retail traders on every single order. I mean if all those MM's claim that we are actually getting the best price under the PFOF, then they shouldn't be afraid of disclosing this information. It's only when we see exactly how the situation is, then we can start to compare apples and oranges and decide on the best course of action otherwise all these proposals are meaningless.

 

[schizo]

I don't understand why the SEC just can't ban the PFOF outright and make everybody trade against each other on the exchanges and have the exchanges operate like an open book with orders matching each other. It works for the futures and bonds market and in many countries for stocks and options. Why can't it work for stocks and options that have much trading volume in the United States? This is just perfect greed and once SEC is afraid to upset the hand that feeds it so it pushes the problem onto the brokers.

Political lobbying, perhaps? By the same token, shouldn't the SEC have banned HFTs from front-running everyone else's order by now? No, never. Because they know leveling the field makes the so-called "smart money" look not so smart in the end.