Payment For Order Flow Is Alive And Well on Wall St.

13

April, 2012

Payment for order flow has been around on Wall Street for a long time. Bernie Madoff was one of the pioneers of this practice. His firm, Madoff Securities, was known as the third market. They would pay other brokers a penny per share for market orders and then trade in between the NYSE specialist spread. Madoff was able to trade around 10% of volume with this arrangement and was able to make a lot of money.

Most online brokers today sell their market orders to “internalizers” who pay a fraction of

This content is restricted to site members. If you are an existing user, please login. New users may register below.