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Businesses exist to provide a service to customers and get paid for that service. In a capitalist free market system, customers can choose who to do business with based on who has the better service. Retail brokers are no different.
Robinhood provides a service to retail investors. It has a good UI & some of the most innovative marketing in the industry. Retail chooses them because they pioneered ideas like $0 commissions and free stock for signing up. Robinhood should get paid for this service.
How much money SHOULD they get paid? They don't charge commissions. They make next to nothing on margin interest. They get paid by routing orders to market makers who can execute them AT OR BETTER THAN the best market price. This is what some armchair experts want to ban.
I legitimately think people want Robinhood to do everything for free. Making money is not the same thing as having a conflict of interest. Wal Mart is not evil because they charge money for groceries. This is the social contract people accept when they walk into their store.
Has RH made mistakes? 100%. Are they being fined for these mistakes? 100% I'm not saying they're the good guys. But they're not bad for making money within the current market structure framework like every other broker.
Protest I can tolerate: PF*F takes flow away from exchanges & raises costs for institutional investors like pensions & mutual funds.
Protest I CANNOT tolerate: PF*F raises costs for retail investors who trade .05 shares of $TSLA from their phone on a Tuesday.
It is okay to want to ban PF*F. It is okay to lobby for that & tweet about that & push for regulation change on that front. But you should NOT say it's to help retail investors. Because banning PF*F won't help them. It will help institutional clients who trade on exchange.
Part of me thinks the whole PF*F debate would be way less sexy & way less talked about if we WERE clear what banning it would do. Media outlets likely don't care as much that Pension Fund ABC is paying more to trade. Retail mom & pop investors getting screwed plays better.
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