Retail brokerages are banklike in that their revenues primarily derive from net interest margin--the big ones can literally mark all other revenue streams to zero and still generate massive profit from net interest
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Great thread about the retail trading landscape. One thing I would add is that even if PFOF goes away it's highly unlikely that we'll go back to a world with $5/trade commissions because it was both a bad customer experience and not necessary for the brokerages to make $$$https://twitter.com/HideNotSlide/status/1404780934562471943 …
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So even in a world with no PFOF I think it's not just possible but *likely* that the brokerages will continue with free trades as a valuable tool for customer acquisition--after all, if you're the only shop in town with commissions do you think retail traders will go to you?
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The point here is that not only does consumer psychology favor zero commission, but retail brokerage economics do as well. They are in the business of collecting retail dollars and generating net interest from that base. They are not in the "trading" business per se
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Yes, in the new world commissions are likely to be in the form of X bps on notional traded, which is much more fair to small clients than fixed fee per trade.
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I was thinking it might be something like you get a fixed # of free trades per day or week before moving you into a paid tier
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