Matt Levine’s Money Stuff: Does Robinhood Need Order Payments?

PFOF ban?

What if the U.S. Securities and Exchange Commission bans payment for order flow? Robinhood Markets Inc. gets about 80% of its revenue from payment for order flow, selling its customers’ orders to market makers like Citadel Securities to execute them. This is controversial for reasons we have discussed ad nauseam; you can read about it here and here and here. But the basic point here is that Robinhood doesn’t charge commissions to trade stocks or options or cryptocurrencies, so its customers trade a lot, and it can afford to do that because market makers pay for the ...