Even some people on Wall Street are troubled by payment for order flow. Online brokerages counter that it doesn't matter where orders are sent because all firms are required by market regulation to execute orders at the best quoted price. The system is the equivalent of a retailer being required to match the best deal quoted by a competitor. Rather, market makers should work to find better prices for customers, critics say. Market makers counter that price improvement is over-hyped, and that most customers are far more concerned with immediate execution of a trade.
Some customers care about price improvement.
Most of our customers care about certainty and speed of execution. End of story. By the time his firm searched for a better price and realized there wasn't one, the original price at which the customer could have traded would be gone, he said. It's great if they get more. But the SEC, under Levitt, has found the brokerage industry's answers regarding quality of execution to be wanting.