Commission-Free Trading Puts Payment for Order Flow Under the Microscope

Julie Evans MagnifyMoney –  “Pros: There is certainly an argument to be made that market makers are important to the industry. They provide liquidity in the market, making sure there are enough buyers and sellers at any given time to execute the trades people want to execute. The payments to brokers are a way for the market makers to attract orders and compete. Cons: The biggest downside to payment for order flow is that it could potentially interfere with customers getting the best deals possible. It doesn’t necessarily lead to abuse, but it creates the opportunity for it. Pay for order flow is banned in Canada, and it is under review in the UK.”

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