I don’t have to pay a fee to the exchange, the buyers don’t have to pay $58.25, and the sellers don’t have to get $58. 2īut! The broker realizes, look, all these people who want to buy shares could be matched up with all these people who want to sell shares. The broker could send all of its customers’ orders to the stock exchange, where the buy orders would be filled at $58.25 and the sell orders would be filled at $58 the broker would pay the exchange a small fee for executing these orders. Thats way up from 20.8 of transaction revenue in the first quarter of 2021 and just 5 million a year ago. The stock exchange has half a million shares of GameStop available for sale at $58.25, and orders to buy half a million shares for $58. The scope of the issue became clear when Robinhood reported that payment for order flow from crypto trading made up more than half of its second quarter transaction revenue, representing 51.7 or 233 million.
One share each, all using market orders, all at precisely the same time. Half of them want to buy shares, half of them want to sell shares. Broker-dealers also receive payments directly from providers, like mutual fund companies, insurance companies, and others, including market makers. 1 A million people come to a broker to trade GameStop Corp. Payment for order flow is received by broker-dealers who place their clients’ trade orders with certain market makers or communication networks for execution. Here’s an intuitive description of how it works. Okay let’s do payment for order flow again, because people are talking about it and that always stresses me out.
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