I agree with you. I just don’t think PFOF is the problem in itself. It’s just outsourcing order execution (and compliance that goes with it) to a third party. I don’t think having single exchange (monopoly) is good either.
The only solution is a regulator that has balls. From a technical point of view, there are easy solutions. They won't be implemented because it's a political problem, not a technical one. The equation is simple: better execution for retail = less profits for powerful incumbents. If you want the lowest fee, most consumer friendly, investor friendly market, you want something like a public utility. This is not something that the free market is ever going to come up with on its own because it's literally the opposite of the interests of the biggest players.
Well my concern is the MM that the brokers outsource order executions to are not independent 3rd parties but are related entities. Take Robinhood, they claim they are not related to Citadel. and yet 43% of their Q1 revenue of 2021 is from Citadel Securities, the MM that pays Robinhood for order flow and is a wholly-owned subsidiary of Citadel that injected $2 BILLION into Melvin Capital when it was getting f***'ed by WSB for GME and then Robinhood imposed 1-share restriction on the purchase of GME stock regardless of how the purchase is funded, the ONLY brokerage that had such stringent restrictions that Robinhood claimed was due to an increase in margin requirements which all brokerages faced. How convenient! The MM's owner just injected huge $$ into the fund that's losing money on shorting a stock, oh look the brokerage that's earned 43% of the revenue from that same MM just restricted everybody to buy just one share of the same stock. What are the odds on that?? You think without this payment for order flow business relationship, Robinhood would be so keen on going to such length in restricting the share purchase just on that one particular stock?? If this is what they can do to one stock, imagine what they can do or already did to other stocks or options or to their prices?