Registered: Apr 2012
05-08-12 03:57 AM
Quote from Occam:
I know you're not asking me, but I'm confident in saying that this is an incredibly comlplex problem. Exchanges are adding ever-more complex (and rapidly changing) pricing schemes and order types in an effort to differentiate themselves in a market where differentiation is getting ever harder, even as volume shrinks and B/D internalization rears its ugly head in defiance of a (haltingly) opposed SEC that wishes otherwise.
I think the investing public would be better off if all venues adopted identical pricing for adding vs. removing liquidity (rather than favoring adders or removers over the other), and B/D internalization and payment-for-order-flow were explicitly banned. But of course many B/D's wouldn't like this (as the present system gives them backdoor income at the expense of their retail clients) .
Thanks. I agree about the broker/dealer internalization and order-flow payment, since it gives some players an informational edge over others. But why would identical pricing help? As far as I can tell, liquidity rebates encourage liquidity provision, which is - all things being equal - a good thing, no? Besides, with most retail brokers, investors don't have to pay (directly) ECN/exchange fees anyway.