Hmm... its a seekingalpha "article", so read with caution for sure. The general argument is that Robinhood makes 10x more from execution orders per share than ETrade or TD Ameritrade.
Let's do some quick math. Assume the average stock traded has a share price of $50. It takes 20,000 shares traded at $50 for $1,000,000 in volume, for which ETRADE makes $22 per $1,000,000 traded, which sounds like a small number until you realize they cleared $47,000,000 last quarter from this. But off an identical $1,000,000 in volume, Robinhood gets paid $260 from the same HFT firms. If Robinhood did as much trade volume as ETRADE, they would theoretically be making close to $500 million per quarter in payments from HFT firms.
I haven't really thought about everything in this article, but I figured people might be interested in the discussion. Anyone have an opinion on this subject?
Clearly, the HFT firms feel like Robinhood is "more valuable" for some reason than ETrade or TD Ameritrade's order flow. The article is speculative on why, so I'm not 100% convinced it is correct. But I am curious as to what other people's opinions on this might be...
EDIT: I haven't audited the numbers either. I'm more or less trusting the author's work. It seems like a reasonable argument on the surface, I'll have to read more before I can confirm everything in the article.
Submitted May 24, 2019 at 06:27PM by dragontamer5788 http://bit.ly/2X3KhCz
