IB launches IBKR lite : commission free trading for US customers

Investing / Brokers
21

It’s usually not bad, that’s how you get lower spread (and in the US afaik it has to be as good as the current best offer: wikipedia “In the United States, accepting payment for order flow is only allowed if no other trading venue is quoting a better price on the National Market System.”).

What those market makers want is 1) capture the trading sentiment 2) not be rolled over by a massive trade (that’s the worst case for a market maker, a massive trade moves the market against them)
For them getting the retail flow is easy and beneficial to both parties.

Historically most of the revenue of low cost brokers has been through (lower) interest rates on balance.

22

Interesting, wondering if other countries have similar rules. The article states your point 1) as well, but also states that as the transaction are not made public like on a public stock exchange, suspicion is there that they might not give you the best price (breaking the law?).

What does not yet fit is the statement of the IKBR manager. He says:

With IBKR Lite with zero fees, we do what other brokers do as well. We send the order to a market maker like everyone else and do get a provision for this, but investors probably won’t get such good execution (price).