In English folklore, Robin Hood is associated with taking from the rich and giving to the poor. The popular App in the United States, Robinhood, which is set up against investment brokers and advertises no-commission trading, is actually not noble there.
The truth is that whenever someone offers you something for free, you have to ask yourself where the catch is, because there is usually one.
After digging through their SEC filings, it seems that today's Robinhood takes from the millennial and gives to the high-frequency trader.
Pretty noble, isn't it?
In fact, in addition to the fact that a flow of orders in the Robinhood platform is sent to HFT companies, they get 10 times more revenue than standard brokers because of this "gesture". Here is the place to say that there are a number of big and small brokers who refuse these practices of selling their customers' orders to the high frequency algorithms of companies such as Citadel and Apex Clearing Corporation.
Where do Robinhood customers' orders actually go:
On the other hand, it sounds strange and how HFT companies pay 10 times more to Robinhood than the established brokers. The most logical answer is "much worse execution".
Source: Seekingalpha
Original Post: Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders
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