Monthly regulatory filings collated by Bloomberg show “payment for order flow” earned US brokers $2.9bn in 2020. TD Ameritrade generated fees of $1.1bn between its broker-dealer and clearing divisions, while rival Robinhood grew fastest, earning fees of almost $700m.
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Wall Street firms paid almost $3bn last year for retail brokers’ trades
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Monthly regulatory filings collated by Bloomberg show “payment for order flow” earned US brokers $2.9bn in 2020. TD Ameritrade generated fees of $1.1bn between its broker-dealer and clearing divisions, while rival Robinhood grew fastest, earning fees of almost $700m. The lucrative practice allows brokers catering to amateur investors to earn substantial fees without charging a commission for bets on equities and options. It has shot into focus after chaotic trading ignited by users of Reddit’s r/WallStreetBets forum, leaving many small investors surprised to find that their trading was feeding another part of the financial machine.
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