macrocephalopod

wait what? the broker routes the order to the HFT firm who either execute it or send it on to the exchange? ...did I miss something?

then it would get filled either at the nbbo when the order was received, or better if there was price improvement

That is true in theory but they are continually paying fines for filling way off the NBBO price. I have personally witnessed fills in the dark pool based on a price that did not hit the order book at all.

Happens but it’s easy to track (hence the fines). Retail is the most protected group in financial markets. HFTs fall over themselves to trade with retail and even give them *better* pricing than the nbbo most of the time, this idea that they are front-running retail is insane.

They aren't frnt-running retail in the sense of capturing trades, but I'm sure they use PFOF to price options.

In that they use it to update the spot price? Yes, absolutely - *after* they have filled the order.

I used to work at a big HFT, there was an insane amount of internal compliance around making sure information from client flow was not being misused. We went much further than the law required. They are terrified of being audited.