Payment for order flow occurs when a broker sells its customers' buy and sell orders to other trading firms instead of executing them directly. The broker receives a payment for each order sent. This practice is common but can create conflicts of interest, since the broker may prioritize higher payments over the best price for customers.
You place an order to buy 100 shares of a stock through an online broker. Instead of filling your order directly, the broker sells your order information to a trading firm for a small fee. That firm then executes your trade, possibly at a slightly different price than the public market offers.
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