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quant trading strategies - PFOF how it works - Quantitative Finance Stack Exchange

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Stack Exchange network consists of 183 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers. Stack Overflow for Teams is now called Stack Internal. Bring the best of human thought and AI automation together at your work. Bring the best of human thought and AI automation together at your work. Learn more Stack Internal Knowledge at work Bring the best of human thought and AI automation together at your work. I am wondering how PFOF (Payment For Order Flow) works and why people say that hedge funds make wider spread using PFOF. If a client sends an order A then the broker is going to redirect that order to a hedge fund B. Then B is not allowed to offer a worse price than what's available in the market. Hence if on the exchanges the tighter spread is 𝑠 𝑠 then B can makes at most 𝑠 𝑠 , but B needs to pay a percentage of 𝑠 𝑠 to the broker. Hence I don't

quant trading strategies - PFOF how it works - Quantitative Finance Stack Exchange Stack Internal Knowledge at work Bring the best of human thought and AI automation together at your work. Explore Stack Internal PFOF how it works Ask Question Asked 1 year, 4 months ago Modified 1 year, 4 months ago Viewed 371 times 1 $\begingroup$ I am wondering how PFOF (Payment For Order Flow) works and why people say that hedge funds make wider spread using PFOF. If a client sends an order A then the broker is going to redirect that order to a hedge fund B. Then B is not allowed to offer a worse price than

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