We investigate the clarification in 2012 banning the use of payment for order flow arrangements in the UK. We find that over the period 2010–2014 the proportion of retail sized trades executing at the best quoted price increased from around 65% to more than 90%, suggesting that the integrity of the order book has improved. We argue that quote integrity can be maintained without trade-through protection.
- What Is Payment for Order Flow?
- What Are the Benefits of Payment for Order Flow?
- What Are the Disadvantages of Payment for Order Flow?
- What Did Your Study Investigate? What Were Your Findings?
- What Are the Policy Implications of Your Findings?