Business
How do zero-fee share trading apps make money? – The Motley Fool Australia
If these companies give their products away for free, how do zero-fee share trading apps magically generate revenue?
In the United States, zero-brokerage share trading platforms are now the norm.
It all started with the wildly popular Robinhood mobile app, and the more traditional online brokers were forced to follow.
So how is it that these platforms let users buy and sell for no fee? How does the software recoup its costs, let alone make a profit?
It’s because of PFOF. Payment for order flow.
All the US exchanges, such as NASDAQ and NYSE, have this mechanism and it works like this:
- The investor submits an order…
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