The academic literature on PFOF is extensive and consistent: retail investors are systematically harmed by PFOF-driven order routing to wholesale market makers.
SEC Division of Economic Research (2021), Battalio et al. (2016), Angel et al. (multiple), and others consistently find PFOF associated with inferior retail execution quality compared to competitive exchange routing.
Citadel and broker partners fund their own research claiming PFOF benefits retail investors through price improvement. Independent academic review consistently finds these claims do not survive scrutiny.
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