Robinhood sells your orders to Citadel. This controversial practice is known as "payment for order flow."

Like true scumbags, Citadel actually urged the SEC to ban this in 2004.

"Citadel Group urges the Commission to ban payment for order

"This practice distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers."
"Broker-dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers."
"Furthermore, the parties making such payments (either voluntarily or through an exchange-mandated program) are forced to find other ways to recoup the amounts of such payments..."
"...whether through wider spreads or a reduction in other benefits that otherwise could, and should, be provided to customers."
"Payment for order flow is a practice that on its face is at odds with a broker-dealer’s obligations to its customers. A broker-dealer has a fiduciary obligation to obtain the best execution reasonably available for its customers’ orders under prevailing market conditions."
"We do not believe that a broker-dealer that accepts payment for order flow and does not pass such payments on to its customers (either directly or through reduced execution fees or commissions) can consistently fulfill its best execution obligations."
...."Because payment for order flow creates fundamental conflicts of interest that cannot be cured by disclosure, the Commission should ban payment for order flow altogether."
"It is crucial that this ban include not only exchange-sponsored programs, but also payment for order flow arrangements entered into privately between order flow providers and market centers."

More from Trading

Many of you have seen the famous Westrum Organizational Typology model, so prominently featured in State of DevOps Research, Accelerate, DevOps Handbook, etc.

This model was created Dr. Ron Westrum, a widely-cited sociologist who studied the impact of culture on safety


Thanks to Dr. @nicolefv, I was able to interview him for an upcoming episode of the Idealcast! 🤯

It was a very heady experience, and while preparing to interview him, I was startled to discover how much work he's done in healthcare, aviation, spaceflight, but also innovation.

I've read 4+ of his papers, so I thought I was familiar with his work. (Here's one paper:
https://t.co/7X00O67VgS)

I was startled to learn he has also studied in depth what enables innovation. He wrote a wonderful book "Sidewinder: Creative Missile Development at China Lake"


Dr. Westrum writes about China Lake Research Labs: "its design and structure had one purpose: to foster technical creativity. It did; China Lake operated far outside the normal envelope... Sidewinder & others were "impossible" accomplishments,

I love this book because it describes traits of organizations that routinely create and maintain greatness: US space program (Mercury, Gemini, Apollo), US Naval Reactors, Toyota, Team of Teams, Tesla, the tech giants (Amazon, Google, Netflix, Google)

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