Multiple big market makers pay for order flow in the United States, which results in orders getting intercepted before they hit the public markets.
They are generally given some price improvement relative to the public BBO, so the argument is that customers filled via PFOF are better off.
However one second-order effect of PFOF which argues against this is that PFOF makes it less attractive for non-PFOF firms to participate on the exchange.
Because small customer trades, which are generally low information content, have been filled off exchange, only the larger and riskier trades trade on the exchange. This causes spreads to be wider on the exchange than otherwise.
Some European exchanges have banned PFOF. I think these exchanges are working OK without it.
Back around 83 I got to do a project at this facility working with a guy who built prototypes of consumer products. I was in middle school.
The project was to make a wireless joystick for the apple 2. You could go to the basement and fill out an order sheet and get any kind of electronic component. The order was filled on the spot while you stood there.
I didn’t know anything about the assembly written for the project. The mentor did all that. However I got to do all the wire wrapping and some of the other bits. It worked! Good times. No doubt this is one of the reasons I ended up as an engineer…
2*) Do you believe that it is possible to have a human review every FALSE POSITIVE result from automated malware detection on the internet, when reported by those adverse affected by the false positive result?
Yes, yes I do. Banks do it for their customers today at scale.
How many deaths were caused by the lockdown? I know we cant easily measure this but the number is surely substantial and by not keeping this in mind we are implicitly saying the number is zero, which leads us to make bad decisions.
The part about spreads being smaller because machines are making markets is true, but there are important caveats. The one that comes to mind first is that the tight market is only there for small quantities. If you want to trade in size, then you are out of luck.
Machine based market making tends to work well when markets are operating "normally". When some regime-changing news comes out, it's not uncommon for the over-fit algorithms to perform badly so the managers just turn them off. I.e. liquidity disappears just when it's needed most.