Broker Dealers shouldn't be able to internalize flow without paying the best rebate

Discussion in 'Trading' started by clearinghouse, May 30, 2012.

  1. I guess CNBC is saying dark pools are 31% of the volume now. If that's the case, I have a mild gripe about the current structure.

    Say the market is 12 x 13, prints are going off at 13. CBSX or Nasdaq BX (NQBX) is showing at 13 still. Some dark pool/internalizer print is shown on the tape when CBSX or NQBX is the obvious, correct routing choice. The fact that they choose flow and "make it free" for the taker doesn't offset the fact that they technically cheat the taker out of at least .0005 per share of rebate, and a lot of times those dark executions probably cost the taker at least .0010 or more, which is worse than EDGA.

    You might say it doesn't matter because Scott Trade or E-Trade or whatever doesn't pass back the rebate, but even so, if those brokerages got the rebate, the costs would go down for the consumer.

    The current market structure is so broken.