Option PFOF exceeds equity PFOF For Order Flow During The First Quarter Of 2021 Alexander Voigt , Benzinga Contributor May 06, 2021 7:09pm TD Ameritrade, Robinhood, E*Trade, Charles Schwab (NYSE:SCHW), and Webull collected $1.02 billion in payment for order flow in the first quarter of the year. $436 million of these payments came from equity trades, while $587 million have been paid for options trades The top two paying venues were Citadel Securities, with $445 million paid to the top 5 online brokerages, and Global Executions Brokers with $181 million. The first quarter of 2021 saw a substantial spike in retail trading activities, mainly caused by various short squeezes in stocks like GameStop GME 11.22% and AMC Entertainment AMC 2.47% Entertainment Holding. Google trends show the peak in search volume for terms like GameStop, Short Squeeze, and Day Trading in the last week of January. Especially the trading apps Robinhood and Webull saw a significant increase in app installs and new accounts. As a result, the payment for order flow income for Robinhood grew from $91 million in the first quarter of 2020 to $331 million in 2021. Webull had the most substantial percentage gain with $3 million in Q1/2020 to $46 million in Q1/2021. The payment for order flow split by broker for the first quarter of 2021 reveals that TD Ameritrade received most payments, followed by Robinhood and E*Trade. TD Ameritrade: $429 million Robinhood: $331 million E*Trade: $139 million Charles Schwab: $78 million Webull: $46 million Here are the statistics from the first quarter of the previous year: TD Ameritrade: $202 million Robinhood: $91 million E*Trade: $80 million Charles Schwab: $54 million Webull: $3 million The comparison between TD Ameritrades' and Robinhoods' payment for order flow revenue growth proves that Robinhood grows faster than TD Ameritrade right now. Robinhood plans to go public with a listing on Nasdaq in the first half of 2021. This could result in more customer growth, and Robinhood may become the market leader in payments received by selling order flow to venues like Citadel Securities.
The fills on Robinhood are shit compared to Schwab unless you’re abusing them. Schwab will code your account sending it to Robinhood style executions.
We may frown at the implications that 50% of trading flows (retail) detour to Citadel and GEB for "analysis", but the alternative is a $14 round trip trade, as was customary before the advent of the so called "free" trading era. Of course, this may not be an either/or framework and ideally we could go on free trading while brokers would find ways to make money without selling our trades to market manipulators.
Imagine how much the HFs made that easily paid out such sum. And for how much those broker clients got taken for in inferior fills.