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you've come to expect things on the internet to be free when you're not paying for it it's not free you're the product someone else is the customer when you go onto facebook and it's free you're the product being sold uh to the advertiser and your information is sold to god knows who so we now have a system where we're telling investors that it's free to invest in to buy and sell stock uh there are two ways to pay the folks involved in wall street for buying and selling stock one is a commission and you know what it is and so we discourage investors a little bit from buying and selling stock because they have to pay a commission and they know they're paying a commission the other way to do it is to give them a worse um uh uh execution whenever there's a say uh stock being purchased and sold the market maker perhaps citadel might be uh willing to sell the stock for 10 uh for uh ten dollars and five cents uh but uh we'll buy it for only ten dollars the difference is five cents and so the issue is whether robinhood and other people who are been being told you get it for free are really getting it for free uh mr griffin you're a market maker you pay uh some brokers for order flow you pay other you don't pay other order uh others for order flow um so when you pay for order flow you're not making as much on the transaction you have to pay some of that back to the broker that's hidden for the amount of that is hidden from the customer the fact that it exists has perhaps recently been disclosed um sec rules require that people get the best execution but i've recently learned that there's best execution and enhanced pricing so if you get an order from fidelity and you get an order from uh robinhood and you're paying for the robinhood order flow is that customer getting is the robin hood customer getting as good a price as the fidelity customer mr griffin so congressman i i believe that's an excellent question the execution quality that we can provide as measured in terms of price improvement is heavily related or correlated to the size of the order that we receive so if i were to speculate i i didn't do don't tell me that it's that there are other factors involved and take us down another road i'm asking you a clear question assuming same size of order one comes in from robin hood one comes in from fidelity uh is is it not true that one is going to be get a enhanced uh uh best execution and the other one is just going to get best execution so as as i was trying to explain because the robin hood order comes from a community a community of traders who tend to trade in smaller size that isn't my question sir you're abating my question by making up other questions let me repeat two identical orders come in same stock same quantity one's from robin hood one for fidelity what happens the quality of the execution varies by the channel of the order this is a commonly understood phenomena in economics that channels matter so for example when you go get a mortgage a mortgage from jp morgan to their clientele has a different rate of interest okay let me reclaiming my time sir who gets the better deal one that comes from a broker who is uh paying uh being paid for order flow and one not can you testify that that on balance there is no difference assuming the same size of the order so as i said earlier size of the order is only one factor you are doing a great job of wasting my time you might if you're going to filibuster you should run for the senate uh everyone else i've talked to in this industry says when you pay for order flow you get a uh when your broker is being paid for order flow you get a worse execution uh and uh otherwise you're in a peculiar circumstance where you're making
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