From TDAmeritrade Regulatory Fees: "Section 31" Fee: $0.0000207 per $1.00 of transaction proceeds Trading Activity Fee: $0.000119 per equity share Sell 5000 shares of $20 stock Fees are $2.07 + .60 = $2.67
Where do you see "that for a $10K trade the brokers get maybe $2-$2.5 in order flow payments" ? From TDAmeritrade SEC 606 report they get paid $0.0015 per share, That is $0.75 for 500 shares at $20. Payment for order flow has been for both limit and market orders for at least 20 years.
most of the brokers offering zero commission sell there flow to wholesalers. so they could pass some of the money to clients; then you have negative commissions
Let’s note that Robinhood doesn’t charge any exchange fees, regulatory fees are unnoticeable (https://support.robinhood.com/hc/en-us/articles/360001226846-Trading-Fees-on-Robinhood), while also charging zero commissions for option trades (vs $0.65 still charged by other brokers). Does this mean they may be swallowing some costs and therefore pretty much charging negative commissions? And I didn’t see any info about them being unprofitable either, or to what extent. Btw, not sure if IB Lite charges for trading options. (?)
For people who trade real money Regulatory Fees are very noticeable. "Section 31" Fee: $0.0000207 per $1.00 of transaction proceeds Trading Activity Fee: $0.000119 per equity share Sell 5000 shares of $20 stock Fees are $2.07 + .60 = $2.67 Sell 50000 shares of $20 stock Fees are $20.70 + 5.95 = $26.65
I don't know what TDA gets. This is from Robinhood: https://blog.robinhood.com/news/2018/10/12/a-letter-from-robinhood-co-founder-amp-co-ceo-vlad-tenev "Robinhood earns ~$0.00026 in rebates per dollar traded.". That's $2.6 for $10K traded.
A buck is commonly referred to as 1 dollar. 100 dollars as c-note or a benjamin. 1.75 made sense given the account sizes and trade sizes free everything trading accounts usually attract.