Retail Investor Advocates
Organizations like the Retail Investor Association, Better Markets, and the Consumer Federation of America have criticized PFOF as harmful to retail investors and argued that Citadel Securities' dominant position concentrates too much power in one market maker. These critics point to academic evidence of worse execution quality at PFOF brokers and argue that the PFOF system prioritizes market maker and broker profits over investor outcomes.
Academic Critics
Multiple academic researchers have published studies critical of PFOF and the execution quality delivered by wholesale market makers. These papers, published in peer-reviewed journals and presented at academic conferences, document statistical differences in execution quality between PFOF and non-PFOF routing. While the magnitude of harm is debated, the direction of the effect — PFOF associated with worse execution — is consistent across many studies.
Former Regulators
Several former SEC commissioners and senior SEC officials have publicly criticized PFOF and the market structure that sustains Citadel Securities' dominant position. Former SEC Chair Gary Gensler devoted significant attention to market structure reform during his tenure. Previous chairs and commissioners have also expressed concern about the concentration of retail order flow and its implications for investor protection.
Congressional Critics
Members of Congress from both parties have raised questions about PFOF and market structure in the context of the 2021 GameStop hearings and subsequent legislative discussions. The hearings brought national attention to practices that had previously been discussed primarily in financial industry and regulatory circles. Whether Congressional concern will translate into legislation remains uncertain.