Market Makers || Payment for Order Flow Explained || Market Maker and Exchange Incentives

The Wall Street Journal published an article on 31st October named ‘How Robinhood Cashes in on the Options Boom’, this inspired me to investigate Payment for Order Flow further. According to Bloomberg the 11 largest U.S. retail brokerages collected $2.2 billion for selling customers options orders.
Payment for order flow (PFOF) is the compensation and benefit a brokerage firm receives for directing orders to different parties for trade execution (Investopedia, 2021). In this video we look at PFOF for Robinhood in Q3 2021 and the 4 largest brokerage firms in the world: TD Ameritrade, E Trade, Fidelity and Charles Schwab.
Wall Street Journal Article: www.wsj.com/articles/how-robi...
Breaking Down the Payment for Order Flow Debate: a16z.com/2021/02/17/payment-f...
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[@MrDeGuise]

Best explanation of PFOF bay far. Thanks a lot mate.

[@UTAggie]

Love your videos ASX. You have an incredible ability to convey and explain complicated topics in a very succinct and direct manner. Keep it up.

[@Kelvinatie]

Nice info. I learnt some new things. Have a better grasp of PFOF. Thank you.

[@ChrisField13]

Great info, thanks for explaining it so well! Just curious, did you end up finding the answer to your question around 18:00?

[@FreeMarketSwine]

Do market makers have the ability to see the trades of individual traders or do they only see the aggregate trades for each broker? It seems like seeing (and being able to track) individual traders could be such a huge advantage for market makers that it should be illegal if it's not already.

[@tsunningwah3471]

Hi ASX would you consider making a road map to your videos ? So that audience with different backgrounds, from college freshmen newbies to industry experts, could know where to start from

[@jdjprimer19]

Unless I'm mistaken, when you are discussing the amount PAID in cents around the 14 minute mark, it's not the market makers that are receiving the payment. That's what they are paying the brokerage.
Also, explain again why the cents paid is different. You said it so quickly that even on replay it wasn't exactly clear.

[@joep658]

at the end he states brokers are benefitting from the order transactions, i believe he misspoke at that timestamp but his overall point was logical

[@jacob39074]

is Fixed Commmsion Merchants are Best & Safe?

[@jinghuiniu7335]

Is Payment for Order Flow the same as Maker-Taker model?

[@QuantPy]

Not really, Maker-Taker model is the financial relationship between Exchange and Market Marker. PFOF is financial relationship between Brokers and Market Makers