So I got interested in this question and asked a buddy of mine who does equity market making. The general answer is "it depends on the broker, the order and order routing". Specifically, a directed complex order (e.g. stop, stop-limit or mid-peg sent to a specific exchange or dark pool) will be sent to that exchange and will not be visible to anyone beyond visibility offered by the exchange for that order type. I.e. if you are sending something like hidden stop-limit order to whichever exchange implements it, nobody but the exchange will see your order until it is triggered at which point it will be posted to the regular order book as a limit. All good, fairness and beauty rule the world. However, if you are relying on your brokers implementation of a complex order (e.g. trailing stops on RH) it is very likely that the orders are accepted and sent directly to the PFOF counterparty for execution. It is probably specified in the small print that is was signed by the poor sod when he opens the account. Obviously, the orders would still be subject to normal trade-through protection once triggered (PFOF is not an exemption from regulations by any means), however you can safely expect to get negatively selected a fair bit more. Practically, this means that the RH user using a trailing stop is actually going to see an improvement over NBBO on his stop fills, yet the stock will move against him right after a lot of the time.
Can I throw in a wrench in the mix...Fiduciary?? Was thinking about 25 years ago I got a letter from Morgan Stanley. All the brokers were sending these things out. And even YOUR broker has had you sign this. Your broker is not a fiduciary. Your accountant is...Your attorney is one. I'll throw out some terms off the net... Under the U.S. legal system, a fiduciary duty is a legal term describing the relationship between two parties that obligates one to act solely in the interest of the other. The party designated as the fiduciary owes the legal duty to a principal, and strict care is taken to ensure no conflict of interest arises between the fiduciary and his principal. A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf. In most cases, no profit is to be made from the relationship unless explicit consent is granted when the relationship begins. ALL stock brokers do not hold a fiduciary duty toward you (2007-2009). If you call up your broker and ask them, they will throw out some boiler plate phrasing, talking about helping you and wanting to service you. They will throw out tons of phrases...But they will not use the word FIDUCIARY!! That is lawsuit time. So even though you are their client, they DO NOT have your best interest at heart. As this thread was going toward this, I though someone should clarify.