Keep in mind that like most brokerages they probably make a bit of money by being
paid for order flow.
As a result, market makers compete against each
other for order flow, and each online broker chooses which market makers get which orders on our behalf.
Terms of the material aspects of the broker - dealer's relationship with each venue identified above, including a description of any arrangement for
payment for order flow and any profit - sharing relationship
Similar to the Robinhood model, however, Virtual Brokers will likely be compensated for routing orders through various exchanges (i.e. they will be
paid for the order flow).
Why this is important: A responsible broker should not contravene any regulation that restricts payment
for order flow, or hide behind any opaque undisclosed third party relationships which effectively result in the broker indirectly profiting from position taking based on its clients trading activity.
One practice that continues to this day is «payment
for order flow» (sometimes called «customer priority»).
Now, NYSE and NASDAQ profit from this because they sometimes receive payment
for order flow.