medium · Market Microstructure
A retail broker routes a buy order to a wholesaler and receives $0.002 per share in 'Payment for Order Flow' (PFOF). The wholesaler fills the order at the National Best Offer.
This practice is most criticized for which of the following?
- Increasing execution latency for the retail trader's order.
- Violating the exchange's Sub-Penny Rule on quote increments.
- Cream-skimming uninformed orders away from public exchanges.
- Reducing the total volume of shares traded across the market.
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