Welfare Analysis
In economic welfare terms, PFOF transfers surplus from retail investors to wholesale market makers through information asymmetry and market power rather than value creation — approximately $1-5 billion annually.
PFOF creates a clear economic structure: Citadel profits, brokers earn ancillary revenue, retail investors pay through inferior execution.
In economic welfare terms, PFOF transfers surplus from retail investors to wholesale market makers through information asymmetry and market power rather than value creation — approximately $1-5 billion annually.
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