TLDR
Payment For Order Flow (PFOF) is a unique kind of practice where big players or wholesale market makers pay brokers for their clients’ order flow. The acquisition of order flow in large quantities like that enables market makers to trade profitably against client orders. The Securities and Exchange Commission amended its Rule 606 with changes aimed at payment for order flow. It requires brokers to disclose payment details with their clients by providing them with quarterly reports. Critics of PFOF arrangements argue that such arrangements generate a conflict of interest in brokers’ best execution obligations.via the TL;DR App
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