I have made a series of counter arguments on Tabb but I would like to post here for those who are not aware of the implications of PFOF. Simply extrapolate the factors and you will see how bad it gets. Imagine the HFT firms get bigger in the future and 85% of orders go through them. All traders see the Bid and Ask listed on the exchange and it is more or less stagnant. the 15% is “making the market” and that is the quote that the HFT is guaranteeing to improve against. Is the Bid Ask quote by the 15% a fair market value? PFOF buyers are paying for information. If they capture a large volume of all trades (especially now with more brokers going zero comm), they can withhold such information from the exchanges. The actual market can now be easily manipulated like penny stocks. Dont forget that these PFOF buyers can also do internalisation and profit big time at the expense of the trader that thought he got the best price. As long as the publicly listed market quotes are not indicative of the real supply and demand (ie ineffecient), the entity with the most information gets to profit the most, that is the PFOF buyer. Another point I would like to bring up is these MM guaranteeing NBBO but not at the mid. If you trade options, always going for the marketable price will wipe you out quick. If I were to route direct to the best exchange, i would be getting filled at mid or just slightly off most of the time. The MM doesn’t fill at that price but much further from mid or maybe at the marketable price, why? Because they pay for PFOF and need to make at least a penny from me.