drew

16/ Again this is entirely inconsistent with the behavior of retail PFOF. Citadel and Virtu would be fighting to get the *smallest* market share possible. Not competing to handle more flow. Remember the point of follow on is “just a small taste”— not to eat the whole buffet.

17/ All of which is to say that none of the stylized facts or behavior of the market participants indicate that retail PFOF creates any significant informational for exchange market making.

18/ Occam’s Razor: Robinhood’s flow is valuable because you want to trade *against* it. If one wanted to trade with it, it would defeat the entire point of internalizing it in the first place.

yeah this is the point i was most suspect on, i think probably what i should've said is that MMs have a broader view of liquidity and can do arb trades to offload inventory when they trade against retail flow

Def want to trade against retail, but doesn’t mean that it isn’t valuable for alphas. Total-retail = informed. Don’t know what info is available to mm and when though w/ regs.

Potentially. But remember FINRA requires trades be published within 10 seconds. At most flow can only be proprietary for 10 seconds. I can maybe believe retail has alpha, but I can’t believe it has alpha at O(1s). The jitter alone to enter a Robinhood app order is way longer.

If you see a trade hit trf, how do you know if it is a child order from big institutional or retail?

That's an interesting point, but feels like when the value proposition is explicitly disentangling retail from institutional flow, it's really into the weeds. It would require: