people love to have super convoluted theories about PFOF and citadel and the other off-exchange venues but what if i told you that off-exchange market-making is just selling a massive option on keeping a monopoly on sub-penny pricing?
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in 2009 when i was a backoffice baby i read the original Sigma X paper after hearing people railing on “dark pools” for weeks and it was like “oh so they just internalize order flow and cross it at midpoint to save clients money?” and it became a great litmus test of comentators
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there is a perfect relationship between how cool the name of some financial plumbing piece is and how boring and Lawful Good the behavior is. the bad stuff always gets a generic boring name like “repo 105”
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