While retail PFOF gets most of the media attention, most of the major stock exchanges also offer order routing incentives in the form of rebates. These rebates often vary based on volume as well as the type of order that was used to execute a trade. Over the years, the exchange rebate/fee schedules have continued to get more complex as incentives continue to been added for their best customers. If you want to get a sense of how ridiculous this has become, take a peek at the 26-page NYSE price list. In addition to transaction rebates, some exchanges also offer (more…)

For years, we’ve been talking about the dangers that high frequency trading has brought to the US equity market. We’re sure that sometimes we sound like a broken record, but the dangers of HFT and their disappearing liquidity have not gone away. In addition to the dominating the US equity market volumes, HFTs have infiltrated and dominated most other markets including some parts of the US Treasury market. In their just released semi-annual Financial Stability Report, the Federal Reserve raised concerns about how some areas of the US Treasury market have become overly dependent on HFT liquidity and what could happen to (more…)

03

Mar, 2022