Comment by kortilla
3 days ago
Nope, this is one of the counterintuitive things about people paying RH for order flow. Market makers can offer tighter spreads when they know it’s a pool of dumb money.
3 days ago
Nope, this is one of the counterintuitive things about people paying RH for order flow. Market makers can offer tighter spreads when they know it’s a pool of dumb money.
tighter spreads are not zero spreads
What’s your point? The spreads are tighter than you would get on the open market.
NBBO requires that if there is something better that Robinhood gives it to you.
I think the point is that if you trade, you pay the spreads. Market makers can help you pay narrower spreads, but you still pay them.
If you just hold your index fund, you don't pay these recurring spreads.