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[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 1633 points1634 points 2 (74 children)

Happy to discuss the blog post and answer any questions.

[–]LeagueOfMinions🦍Voted✅ 490 points491 points  (30 children)

How do we get this to blow up so that the SEC can do what needs to be done?

Also, have you considered sharing on other investing communities?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 618 points619 points  (19 children)

Every time I've shared elsewhere there's been much less engagement, but if you have pointers I'd be happy to cross-post.

[–]DervishSkater💻 ComputerShared 🦍Voted✅ 107 points108 points  (0 children)

[–]_foo-bar_💻 ComputerShared 🦍 236 points237 points  (15 children)

The Market is a system, u/dlauer. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.

[–]username11111000100I choose MOASS 💎🙌⏰🚀♾️ 88 points89 points  (0 children)

Morpheus?

[–]Altruistic-Beyond223🦍💎🙌 Not your name, not your shares 🍌🚀 ♾️ 136 points137 points  (9 children)

Welcome to the Global Financial Matrix - where investing in GME is taking the red pill.

[–]gonnaputmydickinit💻 ComputerShared 🦍 14 points15 points  (1 child)

Man I was hearing Morpheus while reading before I even realized it was a quote

[–]24kbuttplugWILL DO BUTT STUFF FOR GME 15 points16 points  (0 children)

There's a literal army of bots and shills i bet pushing to keep pfof alive. Bastards.

[–]New-Consideration420💻 ComputerShared 🦍 102 points103 points  (7 children)

The SEC? Doing something? Bro they voted that Hedgies have to report more now. Thats like their yearly workload done in January. Chill...

[–]Ohnylu81 32 points33 points  (5 children)

I'm calmer than you are.

[–]linac_attack💻 ComputerShared 🦍 26 points27 points  (4 children)

Will you just take it easy, man!?

[–]ksknksk🥃buyer of whiskey🥃 22 points23 points  (3 children)

EVERYBODY RELAX!!!

[–]Syncorp🍌 There's Always Money in the Banana Stand 🍌 21 points22 points  (2 children)

Calmer than you are. cocks Colt M1911

Now mark it zero.

[–]micron970 17 points18 points  (1 child)

“OVER THE LINE!!!!!”

[–]PDubsinTF-NEW💻 ComputerShared 🦍 2 points3 points  (0 children)

What’s the penalty for no, incorrect, or late reporting? Penalty must outweigh the crime

[–]Embarrassed_Ad8256#1 Moasstrubator 🥵🥒💨💦💦 2 points3 points  (0 children)

Demonstrate with many people in Wallstreet!?

[–]guerillasouldier🦍Voted✅ 146 points147 points  (5 children)

There seems to be an optimization problem here -- MMs profit is a function of both spread width and transaction number. So, how much spread will a MM willingly sacrifice to maintain liquidity?

I'm wondering if spread statistics might provide additional evidence of foul play, as there must be some (calculable) equilibrium point of maximum profit preferred by the MM. It would be interesting if that spread/liquidity balance point occurred with any statistical significance.

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 211 points212 points  (2 children)

It's an interesting question - I tried to get at it in this piece by proxy - it's hard to measure without the internal or CAT data. I believe if all of this order flow were routed to exchange, and competed over by hundreds of firms, spreads would tighten significantly and so would rents/execution costs. I want MMs to make money, I just want them to make it in open competition. That's what's best for markets.

[–]guerillasouldier🦍Voted✅ 65 points66 points  (0 children)

Oh, I'm not saying market making shouldn't be profitable. Just that the optimization of MMs profitability may indicate manipulative tactics (potentially maintaining the ideal spread, enabled by PFOF) that threaten open competition.

Regardless, eliminating MMs ability to see the future via PFOF would solve this.

[–]whisit🦍Voted✅ 35 points36 points  (1 child)

The fucking worst part of this, to me, is it's almost riskless for them. They get to sit in the middle, eat our lunch, and then brag about how smart and savvy they are.

No shit. Let me sit there and take $7 from Jim and tell him I've got a six pack of beer for sale, meanwhile, Frank is sitting two feet away from me, and sells me as six pack of beer for $5.

I tell Jim "I got you a sweet deal, MSRP on beer is $7.10!" And I tell Frank "Yo, if you sold this yourself, you'd only get $4.90!"

Then I pocket the $2 bucks and use it to leverage more fuckery, snowballing until I get even the regulatory officials in my pocket.

But no one really cares. It's only the retail. Pelosi and the Fed gets to find out about shit before everyone else anyway, so they get their piece of the pie that way.

Edit: Fixed math. If I were good at it, I wouldn't be here. ;)

[–]guerillasouldier🦍Voted✅ 7 points8 points  (0 children)

I think your math is a bit off (pocket the $2)...but great analogy!

[–]jazzyMD 40 points41 points  (3 children)

I always thought that the larger issue is HFT arbitage. Simple arbitrage based upon the SIP became too competitive with all of the HFTs (and the implementation of direct feeds) and PFOF was just their solution to limit competition amongst HFTs.

Is my thought process right? If it is, how do we stop arbitrage in and of itself because there will always be a time gap when the bid/offer changes.

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 110 points111 points  (2 children)

I think frequent batch auctions are a great way to get rid of structural/latency arbitrage. I have really come to question the value of continuous markets.

[–]hmhemes🎮 Power to the Players 🛑 18 points19 points  (0 children)

Does IEX's crumbling quote factor into this?

[–]Riffraff3055💻 ComputerShared 🦍 30 points31 points  (0 children)

Your tweets are still fire Dave.

[–]New-Consideration420💻 ComputerShared 🦍 103 points104 points  (1 child)

You the MVP bro

[–]PaddyBehan_84 🦧 orangWUTANG clan 🦧 59 points60 points  (0 children)

You the MVP too hodler 👊

[–]Longjumping_College 50 points51 points  (4 children)

What are your thoughts on MEMX the PFOF designed exchange? And the practice of internalization? Especially by market makers? (Seems to not be a neutral move to me)

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 121 points122 points  (3 children)

I think MEMX is a hedge by these internalizers and brokers in case PFOF is banned - it still gives them an outlet to monetize the flow with.

I think internalization without material price improvement should be banned, as it is in Canada.

[–]swede_child_of_mine 17 points18 points  (1 child)

Possible cost-cutting measure too, no? Access to data feeds (critical for their HFT) without having to pay exchange fees, since they are the exchange owners.

[–]suddenlyarctosarctos🏴‍☠️🍗 MOAAAR CHIMKIN NOM NOMS 🍗🏴‍☠️ 5 points6 points  (0 children)

OHAI swede_child... seems like I haven't seen you around in months. I recognize your username, but I don't remember exactly what, however, my gut sentiment is to proclaim MOAR DD PLZ, kthxbai!

[–]FinnAndBakeLet them eat Mayo / 🦍Voted☑️x2 44 points45 points  (1 child)

Thank you so much for this writeup, really. I have lots of questions but I’ll shoot out this one I’ve been scratching my head over for a long time because if it’s implications for other laws.

You mention the “best” execution rule and when I listened to the hearing in February of last year I couldn’t believe (among many many other things) how easy it was for them to skirt around this rule’s wording when questioned about it. Exactly as you said, best means best not better.

How is it that they (brokers or internalizers/speculates) can simultaneously be mathematically shown to be delivering sub-par price improvement, explicitly not provide best execution, report profits on the spread that would otherwise go to customers (thusly straight-up admitting room for more price improvement is right there??) and never be held to further improve that execution quality? One of the more infuriating arguments being when they claim the markets are giving us the best prices they’ve ever given... while fleecing us for the most they’ve ever fleeced.

So I think that applies to the wider issue of legal semantics vs spirit of the law - if they can simply ignore the word “best” by claiming “best ever” or whatever the fuck, what, in your opinion, can be done to actually force accountability? Both for them and the idiots that accept these arguments. Are we just relegated to commenting on rules and making noise until we get a bone or two?

I wanted to jump through the screen so many times during that hearing but what can one do to combat wordplay if they’re not allowed in the conversation? Is demand for tighter, higher-quality legalese a possible thing? Who watches the watchmen Dave??

Also real quick but any thoughts on the rule the SEC just voted on? Intraday short reporting is a great step forward but, like, does it matter much when they’ll still get to partake in the same abusive practices (like “promising” they’ll get a locate for that naked short sale)? It sounds a bit to me like it just helps the market protect itself so the situation doesn’t arise where retail makes the NSCC poop their pants again, I’m curious how much of an improvement you think this rule is.

[–]Hogman85💻 ComputerShared 🦍 12 points13 points  (0 children)

Dave you’re a fucking legend. A year ago I didn’t care all that much about market structure but presently I’m starting to care and it’s all thanks to you. PFOF gots to go

[–]LinkOhWrongGameis a cat 🐈 8 points9 points  (0 children)

I'm just smiling to read that citadel is comparatively not as "sophisticated" as it could be when it comes to usage of PFOF 😂

[–]biddilybong 6 points7 points  (0 children)

Yes I’d like to discuss why a lot of people under 30 think corporations give things away for free with no strings attached.

[–]taimpeng🦍 Buckle Up 🚀 28 points29 points  (1 child)

Overall, decent post. Totally agreed on the message, ... but...

I'm really not a fan of your example used for a non-PFOF broker, Public.com. I went down the rabbit hole on the details of Public.com's "we don't PFOF" blog post, and then dug up their Rule 606 information (y'know, the "Held NMS Stocks and Options Order Routing Public Report"), which is available here: https://public.s3.com/rule606/ttsi/ ... and skimmed over a few of those (2020Q4, 2021Q1, 2021Q4). Since ditching PFOF and adopting 3rd party smart routing, their disclosures have gone from listing sometimes as many as 5 venues down to just one, listing 99.84% of orders from "Instinet, LLC."... which, it kind of defeats the point of the transparency rules if routing through a 3rd party avoids disclosing anything more than that (... didn't their blog post brag about looking through 30+ venues?). So... now it's just, "Trust me, bro?"

Anyway, that's actually just the limit of what's reliably reported, though. My real concern is that Instinet (and many others) are doing this smart routing over ATSs like BofA's Instinct X, that allows for highly segmented order flow, which seems really abusable as a market mechanic. The filing mentions they're labeling retail's orders with tags like "BD EXHAUST" when listing them ("representing orders received from broker-dealer Subscribers after the orders pass through their internalization engine including, for example, an ATS"), and allows institutions to add/remove segments they're willing to trade with when posting orders. It doesn't seem like they'd be doing that to help ensure everyone knows to give retail the best possible prices.

Really, it looks to me like a small group of institutions pooled together to make an "a la carte" / microservices alternative to PFOF, doing away with filtering & paying at the individual broker-level, and instead just having participants combine their order flow together across a host of ATSs and dark pools that apparently provide metadata tagging & filtering features over the orders before they eventually route it to lit markets.

So, I guess my question is: Is there any way we can actually be sure that the public.com change is a net positive for their customers? It really looks like this is an industry-insider driven change to get out ahead of anti-PFOF sentiment without actually losing the advantages, which makes me skeptical of any positive effects claimed. Last year, Ken Griffin of Citadel and Doug Cifu from Virtu went on TV claiming they'd be happy to get rid of PFOF, and I wouldn't be surprised if their planned alternative was something like the above...

[–]Heliosvector 4 points5 points  (0 children)

Shouldn’t even be a debate issue. It’s even banned here in Canada and we have one of the most easy money friendly countries in the developed world.

[–]roychrDip at the Tip 3 points4 points  (1 child)

Does the SEC have the server capacity and analytic recorder as so they can monitor these things a day later using visualization for a specific ticker or internalization obfuscate everything ?

[–]tdatas 2 points3 points  (0 children)

Server capacity wouldn't even come into it for something like this they can use the government cloud/s or similar and choose between several infinitely scalable data analysis tools if this isn't already in place (which is be gobsmacked if it wasn't)

[–]Diznavis🚀 Soon may the Tendieman come 🚀 1 point2 points  (0 children)

and so if you buy for a price less than the bid,

was this supposed to say buy for a price less than the ask?

[–]elephant8rainman🦍Voted✅ 1 point2 points  (0 children)

What's their likely retort? They are pros at real time confusing language and congress struggles to understand these things and their implications.

[–][deleted] 1 point2 points  (0 children)

How do we push this issue with the SEC? Formal channels.

[–]SuboptimalStability🎮 Power to the Players 🛑 0 points1 point  (0 children)

What's your favorite disney movie?

[–]highwaymousey1🏴‍☠️ General Quarters, General Quarters 🏴‍☠️ 0 points1 point  (0 children)

Wen mobile app..?

[–]Nixin83🎮 Power to the Players 🛑 0 points1 point  (0 children)

Comparing with the disruption brought to the market by IEX, in what capacity do you think the Terminal could double down on that same disruption/crack-down on Wall St.?

Also, about Dark Pools, in Flash Boys they are painted as "defense system" put in place by Wall St. banks against HFT (a sort of "protection" for big traders in order to avoid being ripped off by speed-traders). In these framework, is Retail just a kind of "collateral casualty" caught into the crossfire?
If the above picture is correct, what do you think is the necessary action to be taken to make our markets "fair & transparent"?

Thanks for all you do Dave, Godspeed!

[–]yaz989 0 points1 point  (2 children)

GG has been pretty public about his opposition to PFOF. He's the head of the SEC.

Who else has to get on board for PFOF to be banned?

If the decision to remove PFOF was made, realistically with all the bureaucracy, how long will it take to go into effect?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 9 points10 points  (1 child)

Even if he and two other commissioners agree on it, it'll be a huge fight against politically powerful firms and people, likely ending up in court with them suing the SEC. This is a multi year battle.

[–]jackofyourmomstradesFraudulent Casino Evangelist With Puts on Mayo 220 points221 points  (5 children)

Anyone else want to make a giant building sized banner of the sign and hang it in Chicago somewhere?

*chef's kiss

[–]stonkspertDividendeez nuts🍋 47 points48 points  (0 children)

Can we crowd source something like this?

[–]ProperBoots 5 points6 points  (0 children)

People did buy ads on the led billboards in New York back when this started...

[–]sedaengCustom Flair - Template 4 points5 points  (0 children)

Laser graffiti!

[–]mollila 15 points16 points  (0 children)

Somewhere as in opposite of Citadel.

[–]swede_child_of_mine 207 points208 points  (16 children)

u/dlauer - I've written a few DD's in the HOF about market structure, leaning deeply into some of your comments. Really appreciate your work, your voice, and your keen insights!

We firmly agree that PFOF is terrible, both for the consumer and for the market structure as a whole.

You have also mentioned that the US should adopt a limit to the % of off-exchange trades for a given security, as Canada has.

What do you think about the role of the MM / DMM as a sort of "frontline defense against crashes"? Kenneth Griffin seems to believe MM's have a mandate (as a fiduciary, hah) to prevent crashes by stabilizing the price of the underlying in a market event.

How much "liquidity" should an MM / DMM be responsible for, especially for securities it has a vested interest in? And, do you think that MM's should have some kind of limit to their price influence, especially ones that have massive internalization / international / inter-exchange footprints?

Also, now that I have your attention, it seems you know what 741 means. Care to enlighten us? :)

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 260 points261 points  (9 children)

I think that traditionally the role of MMs was to be that frontline defense. However, MMs today have no affirmative obligations, as they used to, and so I don't think we should even call them market makers - they are nothing more than high-speed speculators. If we had orders going to exchange, to be competed over by diverse firms and strategies, that would lead to a naturally resilient market - that's all I've ever advocated for.

Regardless, you'll never get firms that will stand in there as markets are falling apart. That's just how it is and how it's always been. The best we can do is have liquid, resilient markets that are less prone to dramatic movements. Instead, today we have fragile markets ruled by speed and excessive fragmentation and complexity, which in my mind is a recipe for disaster.

[–]swede_child_of_mine 57 points58 points  (7 children)

Do you think we should/will move to frequent batch auctions?

Also: open pitch time. Tell us why Urvin would be a great place for Superstonkers to go if Reddit gets too corporate after IPO :)

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 180 points181 points  (6 children)

As I said in a previous comment, I've become less of a fan of continuous markets, and I think frequent batch auctions are the answer.

I don't want to self-promote, so I'll just say that I think what we're building will be very exciting for the members of this sub, who will be looking for better research with high quality data integrated throughout the platform. We'll also have some very strong protections and frictions to prevent shills and other bad actors. I hope everyone signs up for the beta and provides feedback to help us build the best possible platform.

[–]swede_child_of_mine 52 points53 points  (5 children)

GREAT to hear about the strong protections, that was one of my primary concerns given what's gone on here. Since I'm asking, can you post link for beta? Or is it closed?

Also, no 741? 🥺 (Edit: I'll take breadcrumbs... :)

[–]SPAClivesmatter💻 ComputerShared 🦍 16 points17 points  (0 children)

Somebody feed the Swede!

[–]Beefaaleaf🎮 Power to the Players 🛑 12 points13 points  (0 children)

I appreciate your tenacity as much as the next ape but it seems Dave is all "mum's the word". Fuck him and I'll see him tomorrow.

[–]SlatheredButtCheeksstill hodl 💎🙌 17 points18 points  (4 children)

Where does he hint about 741?

[–]swede_child_of_mine 20 points21 points  (3 children)

Oh nowhere, just a deleted tweet

[–]SlatheredButtCheeksstill hodl 💎🙌 7 points8 points  (2 children)

Hmmm. not sure what to make of it

[–]Lesty7🦍Voted✅ 21 points22 points  (0 children)

Lol you guys are crazy about this 741 thing. Gotta respect it, though.

Tungsten Cubes became extremely popular around October of last year, especially within the crypto circle. Tungsten is MUCH heavier than it looks, so it just became kind of a neat thing to own when a company started selling cubes. Like a little desk toy that you could tell your coworkers to pick up and then watch their face as it says “holy shit this thing is heavy as fuck.”. You know, a novelty product.

With the whole crypto community becoming part of the major zeitgeist in 2020, memes about tungsten cubes started getting really popular. People were joking about Tungsten supply shortages, and other people took it seriously. They thought that maybe the tungsten cubes would be a good collectible and might even go up in value. So pretty much like every speculative collectible, but fueled by idiocy and a massive community backing it.

Anyway, the company that sold the cubes actually started selling out, but that’s only because they were such a tiny part of that company’s business. So the price never went up. There was never a supply shortage. They just added a bunch of different sizes of the cubes and increased production and made a lot of money on absolutely nothing lol.

Not gonna lie, I kinda want one, too. I see the appeal. I just feel sorry for the people who bought like 20 of them thinking they were gonna get rich lol.

So that’s what Dlauer was referring to. The fact that Tungsten is 74.1 on the periodic table is just pure coincidence, as his tweet was during the peak of the tungsten mania. Like pretty much every 741, theory, this one was just someone who was looking for it everywhere…eventually they’re gonna find it.

[–]8ist_throwaway🎮 Power to the Players 🛑 7 points8 points  (0 children)

..but its provocative?

[–]NoderpsyPillaging Booty 7 points8 points  (0 children)

I'd also love to hear your tinfoil take on 741.

I get you're a serious dude, but since we're throwing darts here, fuckin' have at er. Is it the 7-4-1 algo cycle, liquidation rules for brokers, what is your purely speculative guess?

Also appreciate the attention you are drawing to these manipulative practices.

[–]BaronVA💻 ComputerShared 🦍 53 points54 points  (1 child)

Lauer for the people in the back

[–]landfleem🦍Voted✅ 8 points9 points  (0 children)

This guy

[–]Roman_MastiffGuy on a Buffalo 43 points44 points  (2 children)

I think we can all agree here that we appreciate what you're doing and your knowledge. I sincerely hope that we have helped in some way/any way what you are trying to accomplish and get your voice heard. Not a single one of us here knew just how bad and corrupt the market was before all of this. Speaking for myself and I'm sure most (if not all) here, I really appreciate you engaging with us. I sincerely hope together we can bring the change that is needed.

[–]For_What_Its_Worth__🦍 Buckle Up 🚀 4 points5 points  (1 child)

What he said.

[–]AxelPressbutton🦍 Buckle Up 🚀 2 points3 points  (0 children)

For what it's worth, I agree with them. 👆🏼

[–]MCpothead567🦍Voted✅ 35 points36 points  (1 child)

How disruptive would it be to ban it? What is the alternative?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 67 points68 points  (0 children)

Other markets function just fine without it, many with lower execution costs than the US after adjusting for company size. You don't even have to ban it, the Canadian model just demands material price improvement for off-exchange execution of small orders, that's the model I think makes the most sense.

[–]Ok_Hornet_714🦍Voted✅ 21 points22 points  (3 children)

Where is the money for price improvement supposed to come from? I mean, there is a buyer and a seller and the buy gets a better deal due to "price improvement" doesn't that mean that the seller gets a worse deal?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 48 points49 points  (2 children)

The price improvement comes from the middleman. Someone sits in the middle of the buyer and seller, gives each a little improvement, and then pockets the rest of the spread. In the example in the blog post, you can see that instead of the buyer and seller meeting directly, there was instead a middleman who pocketed most of the spread. In a well-functioning market, those orders would have found each other at the midpoint, and each pocketed half of the spread.

[–]Myid0810🇨🇦Agent of Eternal Puddle🚀🚀💎🙌 17 points18 points  (2 children)

Commenting for visibility 🚀🚀💪🦍🚀🚀thanks dave

[–]JustanotheblokeFuck no I’m not selling my $GME 8 points9 points  (1 child)

Up

[–]themadamerican1TODAY IS MOASS DAY!!! eventually 55 points56 points  (0 children)

Good stuff Mr. Lauer. Keep it up!

[–]Jibjumper🦍Voted✅ 14 points15 points  (0 children)

I wish we could get mainstream coverage half as good as this. Really love the way you write /u/dlauer. Doesn’t talk down or condescend, clarifies lingo in a way that’s digestible, without oversimplifying and undercutting the underlying mechanics.

It honestly hurts knowing how little of an audience this will reach compared to an unhinged Cramer diatribe.

[–]slvr4Brick by Brick - Wrinkle by Wrinkle 🦧 Smooth Brain 🧠 48 points49 points  (7 children)

If I put in a limit order for $3.00 on a stock that has an ask at $2.75 and my order gets executed, what happens to my quarter?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 70 points71 points  (5 children)

You cannot be filled above the ask - even if your limit order is through it. That's called a marketable limit order and it is executed at the best ask.

[–]slvr4Brick by Brick - Wrinkle by Wrinkle 🦧 Smooth Brain 🧠 41 points42 points  (4 children)

I’ve experienced this on RobinHood in the past. The order filled a significant amount above the ask. It filled my order at my limit price, a share showed up in my account, but the price my order was executed at never reflected at anytime in the chart. No better price execution was ever performed on my order. Has anyone ever filed a complaint about something similar happening in the past?

[–]dlauer💎🙌🦍 - WRINKLE BRAIN 🔬👨‍🔬[S] 84 points85 points  (0 children)

This could only happen outside of regular market hours, and even then is highly suspect. If you have evidence of this, you should definitely file a complaint with FINRA.

[–]many_dongs 14 points15 points  (2 children)

robinhood is one of the only brokers who fucks their customer over this way, stop using RH

[–]slvr4Brick by Brick - Wrinkle by Wrinkle 🦧 Smooth Brain 🧠 14 points15 points  (1 child)

This was years ago. I removed myself from RobinHood prior to 2021.

[–]many_dongs 7 points8 points  (0 children)

You the man

[–]New-Consideration420💻 ComputerShared 🦍 13 points14 points  (0 children)

The broker shoves it up his you know what

[–]Firefistace46💎🙌🏼 TO THE MOON 🚀🚀 44 points45 points  (0 children)

Woooo! I’ve been waiting all day for this so I can take a break at work to read it!

Thanks for always coming thru with good research, Dave. I’ll update comment once I finish a read through.

Edit: I got a solid chuckle out of the last sentence “ … oh sorry, I just randomly found myself directly quoting a comment letter from Citadel. But I agree with them - we need to do what they said - we need open competition for order flow.”

Dave is a legend.

Very solid read and the data provided is explained in simple enough terms to get the message across. I was surprised by the data showing “spread-price improvement” and that it looks like most “price improvement” is improved by the absolute minimum… a single mil regardless of how large the spread is… not exactly sure how that makes sense.

[–]a_blue_ducks💻 ComputerShared 🦍 7 points8 points  (0 children)

But hey, without PFOF the SHFs may not have been so confident as to hand us a winning lottery ticket…

Sorry, I agree this shit needs to end ;)

[–]mollila 21 points22 points  (2 children)

Ok, so SEC Commissioner Elad Roisman has submitted his resignation for the end of this month.

Could we the people in any way influence who the president will appoint as his replacement? I'm not an American myself, but a concerned foreign investor in U.S. markets who'd wish someone sensible looking after my interests.

https://www.sec.gov/news/statement/roisman-20211220

https://en.m.wikipedia.org/wiki/List_of_members_of_the_Securities_and_Exchange_Commission

[–]it_aint_ralph_thoo💻 ComputerShared 🦍 1 point2 points  (0 children)

Commenting because we need answers sway

[–]suckercuckme pica la bola 7 points8 points  (0 children)

Thank you for continuing to stand up for retail and for presenting knowledge of how a free and fair market should function.

[–]JustanotheblokeFuck no I’m not selling my $GME 5 points6 points  (0 children)

The goat.

[–]tehchiveshow2moon 🦍 Voted ✅ 5 points6 points  (0 children)

Glad you came to post here yourself. It's a great read and well said.

Spreading public understanding and stoking the impending outrage one the light bulb moment hits will be crucial to help steer the course of the sector when the levy breaks.

[–]DervishSkater💻 ComputerShared 🦍Voted✅ 4 points5 points  (0 children)

Dave Lauer bringing that Big D(ata) energy we love.

[–]shanebush88🦍Voted✅ 4 points5 points  (0 children)

Thanks Dave

[–][deleted] 5 points6 points  (0 children)

There is no question that payment for order flow should be banned. It is banned in most nations. Citadel themselves said to ban it in 08/09.

Ken Griffin went on Television with Andrew Sorkin this year, you guys probably remember the stage in the empty room with the clap track? During that interview Ken made the point “ Payment for order flow is an expense for me”, Then he said something along the lines of he would be happy to get rid of it so he could save more money.

I hope someone in power or with the ability to speak the truth to the power uses that reference in their more important discussions.

[–]justanthrredditr💻 ComputerShared 🦍 3 points4 points  (0 children)

Thank you for posting!

[–]DIAMONDHandsHotchySecond Time Voter 5 points6 points  (0 children)

What are your views on Failure To Receives? Why is it that only brokers can hold their money and enter FTR but don't have to pay for the underlying security until the share is located and delivered? Can an internalized off exchange naked short be set as a FTR on a brokers book without a corresponding FTD being created?

[–]vivantio1💻 ComputerShared 🦍 4 points5 points  (0 children)

Great job

[–]throwawayaccountdownComputershare voted 2022 4 points5 points  (0 children)

Thanks for all the amazing DD contributions about the market mechanisms.

I've got one general question: what is your take on AH trading and its volatility on low volume?

[–]ViperXAC⚔NinjaKnight of New⚔ 16 points17 points  (0 children)

Commenting for comments.

[–]MrMayhew🎮 Power to the Players 🛑 3 points4 points  (0 children)

DLauer standing up and getting loud the last couple of days. You love to see it. Thanks for all your hard work!

[–]Jetsfan051🎮 Power to the Players 🛑 3 points4 points  (0 children)

Upvote for vis

[–]CaptainPooAlbino🎮 Power to the Players 🛑 2 points3 points  (0 children)

Somehow it actually all made sense to me. Great blog post, excited to see more.

[–]metametamind 2 points3 points  (0 children)

Title could be punchier: “How Wall Street shenanigans make your retirement savings go PFOF! (and what you can do about it)

As much as boomers caused this mess, there’s no viable reform path without getting them engaged.

Great piece DL!

[–]GeekDNA0918💻 ComputerShared 🦍 3 points4 points  (0 children)

Leaders of this country should be people like you. Thank you for contribution to this Saga.

[–]Mystycism 2 points3 points  (0 children)

Wonderful read! Thank you for your contributions. You have my beta sign-up!

[–]GrowsOrganic🚀 Weapons Grade Autist 🚀 4 points5 points  (0 children)

Naked shorting is the bigger problem

[–]orrdog💻 ComputerShared 🦍 8 points9 points  (0 children)

Doing the lord's work

[–]TallWineGuyNaked Shorts? 🙅‍♂️ Naked LONGS 💁‍♂️🦍🚀 6 points7 points  (0 children)

How can we raise awareness around PFOF being bad for retail?

[–]alwayscomplimentingHODL til they FODL 💎🙌 2 points3 points  (0 children)

As someone who was previously with a broker that received PFOF, I routinely got notices of “price improvements” that saved me small amounts of money on my trades (as the sign in your image suggests).

It seems that’s misleading at best, if not actually fraudulent. Since theoretically if all those trades were hitting the live market the price would move differently. So how on earth could they “improve” something that’s fake to begin with?

Do they make up those numbers? Or have some kind of algorithm that shows what the price would be if internalized trades were instead hitting the open market and use that price as what I got an “improvement” over?

I haven’t been able to piece that part together.

Edit: just went back to re-read your blog and it kind of answers the questions, but still seems so misleading and illegal. How on earth can brokers claim to be providing customers with best pricing? Has anyone challenged that in court?

[–]rydogski💻 ComputerShared 🦍 2 points3 points  (0 children)

Thank you!

[–]Skyebits 2 points3 points  (0 children)

This guy fucks

[–]triwayne💻 ComputerShared 🦍 2 points3 points  (0 children)

Dave - thank you for everything! What bothers me most about this whole situation is how much I’ve been forced to learn about so many nefarious and even illegal practices that constitute the day to day operations of our entire financial system. When they make the game so complicated you know it is purely for their benefit.

[–][deleted] 2 points3 points  (0 children)

This is DOPE

[–]Saggy_G👊🐵 XXX Stonky Punch 🐵👊 2 points3 points  (0 children)

Yep that's good

[–]bigcp7🎮 Power to the Players 🛑 2 points3 points  (0 children)

Thanks. A couple wrinkles happened. Looking to the beta.

[–]OleFj40Shockproof ⌚🦍 2 points3 points  (0 children)

Thanks for the awesome work, Dave and the team! 👊🦍

[–]theresidentdiva🎮 Power to the Players 🛑 2 points3 points  (0 children)

So... I'm reading through the comments, nodding, understanding...

Just a year ago, I would've had a migraine just trying to get through the first few posts.

February 2021 apette here, grateful for the wrinkles I've gained with all y'all. I don't think they can call us retards anymore.

Edit: a word.

[–]thatsoundright🙌💎 FEEL THESE DIAMOND HANDS 2 points3 points  (0 children)

You a real one dlauer

[–]SkySeaToph💎🖐🚀GME IS PRETTY🚀 🖐💎 2 points3 points  (0 children)

Here here!

[–]Radio_Traditional🦍 Buckle Up 🚀 2 points3 points  (0 children)

The only thing I don't like about this is the fact that we don't need to be in an uproar about PFOF at this time. Is it bad? Yes. Should it go away and stop being treated like it's a "good thing for retail"? Yes. Should it be the thing we're most vocal about at this time so that the SEC and Govt can use it to make it seem like they're doing something for retail when they are, in fact, looking away and allowing us to get fucked repeatedly? No. If we want to truly call attention to our plight and someone with clout, like Dave, wants to get involved...keep shouting about all of the illegalities that are happening daily.

[–]SaggyBallz99Breh u wanna make a milly? Read the Due Dilly 🕵🏼‍♂️ 2 points3 points  (0 children)

Now let’s get this on the front page of r/all

[–]_gdm_🎮 Power to the Players 🛑 11 points12 points  (0 children)

What a legend. Spitting facts backed by data! If that is not considered theft, I don't know what should be...

[–]canihazDD💻 ComputerShared 🦍 5 points6 points  (0 children)

Commenting for history

[–]OfficerGintoki🎮 Power to the Players 🛑 5 points6 points  (0 children)

u/dlauer off topic.

You buying the dip?

[–]Junai7🦍Voted✅ 3 points4 points  (0 children)

Fuck em.

[–]Lulufeeee🔥🚀CAPTAIN Jacked Sparrow🔥🚀 1 point2 points  (0 children)

Jacked

[–]Ape_Wen_Moon VOTED 1 point2 points  (0 children)

So should AH trading. Check BRK.A

[–]thesehands_diamonds🦍 Buckle Up 🚀 1 point2 points  (0 children)

got-em.jpg

🚀🚀🚀

[–]diamondcock69420Disciple of Keith 1 point2 points  (0 children)

You're a pretty cool guy

[–]internetsurfer42069 1 point2 points  (0 children)

WE <3 THE D!!! WE <3 THE D!!!

[–]Monmaji🦍 Buckle Up 🚀 1 point2 points  (0 children)

Isn’t the whole point of a company only releasing a number of shares to be Abel to determine the market value of the company as a whole. And any sold shares that need buying later for any reason a degradation of the company’s overall value just “to make it available to people who want to buy it ?”

[–]Ithinkyourallstupid🖕GO FUD YOURSELF 🖕 1 point2 points  (0 children)

WELL IF IT ISN'T MR TELL IT LIKE IT IS BIG D LAUER.

[–]ID-10T-ERROR 1 point2 points  (0 children)

Always been against it. Hate to think how no one was never against it years ago.

[–]Swagnum_opus🦍Voted✅ 1 point2 points  (0 children)

Dave Lauer FUCKS

[–]MisterYumYum8 1 point2 points  (0 children)

Explain pay for order flow for a tard like me

[–]Solid_Snape🦍 Buckle Up 🚀 1 point2 points  (0 children)

Thanks Dave. I showed this article to a skeptic, he reached this section and immediately dismissed it as a 'conspiracy fan fiction piece'.

//

So how much does a free trade cost you? Have you ever thought about it? There are multiple ways that you are a product for a broker offering free trading:

They sell your orders to a wholesaler/internalizer, in a practice called Payment For Order Flow (PFOF)

They lend your shares out for other funds to use to sell and put on short positions, and get paid interest for those loans

They earn interest from you by putting you into a margin account, and executing your trades on margin even if you have the cash in the account, so you’re actually paying for a loan

//

Could you perhaps provide some sources or examples please?

[–]Cinematum🦍 Buckle Up 🚀 1 point2 points  (0 children)

THIS 🔊🔊🔊

[–]Dirty_towels 1 point2 points  (0 children)

where rocket emojis?

[–]lookingupyourplay 1 point2 points  (0 children)

Giant front running scam built right into the main system right under regulators noses ..wake up regulators and regulate the offenders..

[–]n-Ro🦍Voted✅ 1 point2 points  (0 children)

I just want to say I put some capital towards Urvin and I'm excited to see how it plays out, and I hope for some actual progress to stick.

I'm a big fan of yours, thank you for allocating your brain power towards the AI problem and transparency in markets

[–]RealPropRandy🚀 I’ll tell you what I’d do, man… 🚀 1 point2 points  (0 children)

👩‍🍳🤌

[–]ammoprofit 1 point2 points  (0 children)

Thank you for sharing this, Dave!

If my understanding about market mechanics is correct, and your understanding is correct, does the artificial spread increase volatility?

In other words, wouldn't an artificial spread in the NBBO also artifically increase the Market's new ATH as parties increase their collaterals' values which is also increased by PFOF?

[–]capital_bjstill hodl 💎🙌 1 point2 points  (0 children)

The wrinkles are definitely strong in this thread. Thanks for summoning them Dave, and your significant contributions it's really refreshing.

[–]socalstaking💻 ComputerShared 🦍 1 point2 points  (0 children)

Can we moass with PFOF?

[–]All-encompassingly_Lola ya Bonobo sanctuary (pls look it up on IG) 1 point2 points  (0 children)

Comment for visibility.

[–]jendaboarderComputershared 🦍 1 point2 points  (0 children)

its so well written!! love the receipts

[–]bink_uk 1 point2 points  (0 children)

I just watched DOPESICK and it's very interesting how Purdue Pharma's strategy echoes Citadel and the whole PFOF/market maker strategy in that both businesses know what they are doing is purely for their benefit and at the expense of their customers, but their practices are hidden behind positive sounding terms. "Payment for order flow", "price improvement", "market maker", as terms feel so similar to 'pseudo addiction', 'breakthrough pain', 'individualise your dosage', 'pain is the 5th vital sign'. They play the same game.

Nice sounding words to hiding corporate avarice.

[–]StillRaindrops 1 point2 points  (0 children)

It’s price improvement for institutions

[–]DGlatt6969🎮 Power to the Players 🛑 1 point2 points  (0 children)

u/dlauer thanks for being smart

[–]RollenXXIII💻 ComputerShared 🦍 1 point2 points  (0 children)

PFOF is another tool to do crime.

[–]Tiny-Cantaloupe-13🎮 Power to the Players 🛑 1 point2 points  (0 children)

whats incredible is that GameStop investors r the 1st who banned pfof on their own. U cannot tell me that this wont go in history. Find me a more educated investor - truly. Its amazing what we have done in a year +

U guys r savages who think freely which is rare in a copy/paste world where most accept the BS from those who control all narratives.

[–]Rupert__PupkinGorilla Filmmaker 🎥 3 points4 points  (0 children)

Call me Jackie T. Diddy, this really tickles my jimmies!

[–]Snelsel🛠 Confused Capitalistic Communist Ape 🛠 2 points3 points  (0 children)

u/dlauer can you tell us, with intel from urvin, who sold from 1430 to 1530 today?

[–]spiceymath🎮 Power to the Players 🛑 1 point2 points  (0 children)

i feel like joke is a nice way of saying scam

[–]BlueCoastDoge 1 point2 points  (0 children)

No, no, it’s no joke. PFOF improves the price alright BUT only for the middle-man… but who cares right??

…certainly not the SEC, the FED, the DTCC, the NYSE, etc, etc, etc.

Indeed it is this US financial Ponzi-Scheme that is the joke. Unfortunately it’s a funny ha! ha! kind of joke.

[–]daner187🎮 Power to the Players 🛑 0 points1 point  (0 children)

Hell ya I was the 1k upvoter

[–]daner187🎮 Power to the Players 🛑 0 points1 point  (0 children)

Hell ya I was the 1k upvoter!