Study: "pro" brokers (eg: IBKR) have worse execution prices

While reading Matt Levin’s Newsletter I came across a study of the impact of “Payment For Order Flow” (PFOF). According to it, free brokers have, on average, a better execution price. In particular, Interactive Brokers Pro had the worst. This came as a surprise to me.

Broker Cost in % of spread*
TD Ameritrade 2.8%
Fidelity 14.2%
E*Trade 13.9%
Robinhood 23.2%
IBKR Lite 30.5%
IBKR Pro 31.2%

source, page 43

PFOF is the process through which free brokers finance themselves: instead of just submitting the order to the market, they first ask off-exchange wholesalers if they could fill the order at a better price. The wholesalers get opportunities to trade with retail investors, the broker gets a kickback and the retail investor some price improvement. According to this article, an unofficial rule is that at least 80% of the kickback should go to the investor.
The end result seems to be that, if your broker is used by people whose order flow is rich in opportunities, you get a discount.

IBKR’s page on the topic does mention that, if the practice didn’t exist, the spread would most likely be narrower. Who knows?
From a more practical perspective, I wasn’t able to find a study of execution prices for brokers available in Switzerland. Does anyone know of one?


As discussed in the newsletter IB orders might be considered more “toxic” (more informed traders, potentially bigger trades), at least it would seem logical (and would explain the gap between lite and pro, esp. since lite is even cheaper as the trades are commission free iirc).

In any case, we don’t have access to any of the other brokers, right?