Upstream, the revolutionary retail trading app for stocks and NFTs powered by Horizon Fintex and MERJ Exchange Limited, doesn’t require payment for order flow (“PFOF”). Upstream’s smart-contract-powered market avoids it, an example of the app’s commitment to build a transparent trading environment.
According to a recent blog published on Medium, PFOF is a “form of compensation, usually in terms of fractions of a penny per share, that a brokerage firm receives for directing orders for trade execution to a particular market maker or exchange.” The blog explains that investors trading through online brokerage accounts sometimes think they have a direct connection to the securities markets, when actually, orders are often sent to a broker, who then routes that order to a market maker; this third party then decides which public exchange to send the order to.
“Market makers need a steady stream of buy and sell orders to fulfill their role as liquidity providers,” the blog explains. “That’s where payment for order flow comes in. Essentially, market makers pay brokers a small fee for directing investor orders their way. This influx of trades increases their order book depth, potentially allowing them to widen the bid-ask spread — which translates to higher profits.”
However, PFOF can raise questions about conflict of interest. Upstream opts not to utilize PFOF and breaks the mold by operating with public, on-chain orderbooks, where all bids and offers are shown to users free of charge. In addition, Upsteam’s approach includes real-time trading and settlement, prevents market manipulation, and provides direct access to the market and equitable access to data.
To view the full blog, visit https://ibn.fm/VnljR
Upstream, a MERJ exchange market, is a fully regulated global stock exchange. Powered by Horizon Fintex’s proprietary matching-engine technology, the exchange enables investors to trade shares in dual-listed companies, NFTs, shares in IPOs, crowdfunded companies, U.S. and international equities, and celebrity ventures directly from the app. For more information about the company, visit www.Upstream.Exchange.
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