Matt Levine’s Money Stuff: Some Brokers Are Cheaper Than Others

Programming note: Money Stuff will be off tomorrow, back on Monday.

PFOF

In general, in the US, if you buy or sell stock through a big retail brokerage, your broker sends your order to a “wholesaler” — a big electronic market-making firm like Citadel Securities, Virtu Financial Inc. or Jane Street Capital — which takes the other side of the trade, selling you the stock you’re buying or buying the stock you’re selling. The wholesalers want to trade with retail orders, because in general retail orders are less risky than orders on the public stock exchanges; they have less “adverse selection.” If ...