Robinhood, Schwab led US$340m retail order flow payment bonanza in May

By

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August 8, 2025

Payments for order flow are soaring, reaching about US$953 million in the second quarter of 2025, and the spoils are concentrated among a handful of brokers and market‑makers.
App-based brokers’ option orders are where the money is: in Q2 2025, market makers paid US$56 cents per option contract for Robinhood flow; significantly higher than the US$ 40 cents paid for Schwab’s, with Webull at US$38 cents, Fidelity US$35 cents, and Tastytrade US$41cents.

Units: Metric: Security Type: Firm Type: Stacked Area

Data source: S3

In May alone, market makers paid retail brokers US$340 million, up about US$115.9 million or 51.6% from May 2024. Citadel Securities accounted for US$122.8 million, more than a third of the monthly total. Robinhood collected US$128.3 million in May, or US$49.2 million more than a year earlier. Although trading cooled in June, payments across the entire second quarter still reached US$953.5 million, up US$61.8 million (6.8 %) from the first quarter’s US$891.7 million and up more than 64 % year on year (YoY).
Across the spring quarter, executed volume, shares plus option contracts (accounted for in shares equivalent by multiplying contracts numbers by their quotity multiplier), jumped from 373.6 billion units in Q1 to 420.1 billion in Q2. With trading volume expanding faster than dollars spent for flows, the average equity payment for order flow (PFOF) fee fell from US$12.4 cents to US$11.5 cents per hundred shares, while the average options fee paid by market makers (excluding exchange-affiliated flows) rose from US$41.7 cents to US$44.2 cents per contracts.

Flow composition also shifted. Payments tied to market orders increased by US$18.7 million to US$208.5 million between Q1 and Q2. Marketable limit order rebates held steady at US$269.5 million, while non-marketable limits added US$20.8 million to reach US$333.2 million. “Other” orders, stops and conditional orders, generated US$142.3 million, up US$20 million.

Citadel Securities extended its dominance in payment for order flow volume, raising its quarterly spend from US$311.2 million in Q1 to US$340.6 million in Q2. IMC followed with US$195.8 million, up US$15.1 million. Susquehanna and Wolverine paid slightly less quarter on quarter at US$102.3 million and US$82.4 million respectively, while Jane Street displaced Virtu among the top five by paying US$76.1 million.

On the receiving side, Robinhood’s haul climbed to US$342.6million, still behind Schwab’s US$375.2 million. Options remained the engine of monetisation: market makers spent US$636.3 million on options flow in Q2, versus US$317.2 million on equities.
Drilling down by instrument type, Robinhood customers generated US$270.5 million in options PFOF but only US$72.0 million from equities, whereas Schwab’s mix was US$194.9 million in options and US$180.3 million in shares. Citadel spent US$232.6 million buying options flow in Q2 compared with US$108.0 million for equities. IMC and Wolverine remained pure‑options houses; Virtu and Hudson River Trading focused exclusively on equities; Jane Street paid US$61.3 million for stock flow and US$15.2 million for derivatives.

Pricing varies widely depending on market maker. In options, Citadel paid around US$60.0 cents per contract to Robinhood and US$41.2 cents to Schwab. IMC paid US$54.4 cents to Robinhood and US$43.4 cents to Schwab. Susquehanna paid US$60.5 cents to Robinhood and US$42.6 cents to Schwab, while Wolverine paid US$42.4 cents to Robinhood and uS$30.1 cents to Schwab. Morgan Stanley (acting as a market maker) paid US$62.4 cents per contract to Robinhood and executed no meaningful Schwab flow in Q2. Across all market makers, other app brokers’ options flows were priced in between: Webull averaged US$37.5 cents, Fidelity US$35.2 cents and Tastytrade US$40.8 cents per contract.

In equities, the gap was smaller but still visible. Citadel paid about US$14.29 cents per 100 shares to Robinhood versus US$9.51 cents to Schwab. Virtu paid US$14.32 cents to Robinhood and US$10.34 cents to Schwab. Susquehanna paid US$19.85 cents to Robinhood and US$9.45 cents to Schwab, while Jane Street paid US$9.45 cents to Robinhood and US$12.06 cents to Schwab.

Security Type: Date:

Volumes traded by retailers corroborate the economics. Robinhood customers executed 56.3 billion shares and 483.21 million contracts in Q2, up from 37.9 billion shares and 479.2 million contracts in Q1. While the number of options traded is less than 1% of the shares traded (or 83% of the shares equivalent traded multiplying each contract by 100), they generated 80% of its PFOF. Schwab processed 170.3 billion shares and 488.0 million contracts in Q2, versus 148.2 billion shares and 478.6 million contracts in Q1. Options in shares equivalent traded represented 28% of the stocks it traded while accounting for just over half its PFOF.

A Schwab spokesperson said the firm’s routing decisions are driven by execution quality consideration rather than PFOF: “At Schwab, we put our clients’ interests first. Best execution for our clients always takes priority when determining where to route orders. Any eligible rebates from a particular market centre are not a consideration in order routing decisions.”

Robinhood did not respond to requests for comment.

Market makers’ activity is also as differentiated as ever, with Citadel Securities leading in both equities and options execution. They traded 99.2 billion shares and 502.4 million option contracts in Q2. IMC and Wolverine remained pure options players; they traded 431.9 million and 239.4 million contracts, respectively. Virtu and Hudson River Trading routed tens of billions of shares and negligible derivatives. Jane Street increased its share volume for the quarter to 52.8 billion and traded 39.0 million option contracts; Susquehanna sat in between, trading 26.6 billion shares and 164.4 million option contracts.

Five must-read market microstructure papers for beachtime reading

By

Nick Dunbar

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August 7, 2025

When machines learn to trade like video gamers

A branch of artificial intelligence first used to master Atari video games is not an obvious choice for applying AI to trading. But deep reinforcement learning excels at playing the stock market, according to a paper by Jedrzej Maskiewicza and Pawel Sakowski. The AI trader can choose trading strategies in response to market conditions, and is assigned a reward function that measures how well the strategies perform. A neural network learns to choose strategies that minimise the difference between predicted and actual rewards based on the current market state. When applied to daily trading on liquid equity and FX markets, this approach outperforms other machine learning-based approaches. (Link to paper: 2506.04658 )

Using AI doppelgangers to trade Chinese limit order books

High-frequency trading of Chinese stocks is challenging – the limit order book updates only every 3 seconds, and stock prices typically jump after the close. Jiahao Yang, Ran Fang, Ming Zhang and Jun Zhou tackle this challenge using long short-term memory (LTSM) networks – an AI technique developed before large language models – with a twist. They deploy a pair of ‘Siamese twin’ deep learning networks to the bid and ask side of the order book, encoding the LOB into a features vector that is used to predict the next state of the market. The approach outperforms other techniques, especially when the LOB is compressed using order-flow imbalance. (Link to paper: 2505.22678 )

Source: Jiahao Yang, Ran Fang, Ming Zhang and Jun Zhou.

Benchmarking Bloomberg’s TCA formula using agent-based modelling

Pioneered by Doyne Farmer, agent-based modelling is at the heart of market microstructure theories, outperforming traditional efficient market frameworks even when the agents possess ‘zero intelligence’. Perukrishnen Vytelingum, Rory Baggott, Namid Stillman, Jianfei Zhang, Dingqiu Zhu, Tao Chen and Justin Lyon simulate fundamental and momentum-driven agents interacting with a central limit order book, trading Hang Seng index futures. Calibrating their model to market data, they find that transaction costs vary with order size much more than anticipated according to Bloomberg’s widely-used transaction cost analysis formula. (Link to paper: Agent-based Liquidity Risk Modelling for Financial Markets )

Trading creates volatility

Jean-Philippe Bouchaud & Guillaume Maitrier.

According to financial economics textbooks, volatility is caused by new information reaching the market, and prices reflect this information. Not so, according to market microstructure experts who argue that volatility is caused by trading itself. Guillaume Maitrier and Jean-Philippe Bouchaud may have settled this question once and for all with a careful empirical study that brings together three apparently unrelated things: the square root law of price impact, random walks of prices and the impact of order imbalances. Using public tape data for index futures and stocks, they find that a crucial parameter, the long-range correlation between metaorders, plays a decisive role in ensuring that trading creates volatility. (Link to paper: The Subtle Interplay between Square-root Impact, Order Imbalance & Volatility: A Unifying Framework )

The toxic flow problem

Álvaro Cartea & Leandro Sanchez-Betancourt.

Market makers and brokers love trading with uninformed traders (often equated with retail) but live in fear of being picked off by informed traders, who leave them with inventory that is about to rapidly change in price. In the past, quants have tackled the problem of avoiding such ‘toxic flow’ but their models only worked over a limited time horizon. Álvaro Cartea and Leandro Sanchez-Betancourt use a Hamilton-Jacobi-Bellmann approach to extend this to infinite times, providing rules for inventory growth rates based on market volatility and transaction costs. As a bonus, they provide an algorithm that allows practitioners to apply their research on lit order books. (Link to paper: [2503.18005] A Simple Strategy to Deal with Toxic Flow )

European exchanges conceal, relabel amid data price gouging claims

By

Lucy Carter

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August 6, 2025

Euronext reported a 7.5% year-on-year (YoY) data revenue increase. LSEG’s exchange data revenues have been combined with equities, flattering that segment. Deutsche Boerse buries its figures in the footnotes of its accounts. And industry experts are fuming about the lack of transparency.

In LSEG’s H1 results presentation, it revealed that LSE market data and SEDOL, ISIN and LEI reference data sets, previously recorded in the data and analytics (data and feeds) category, would be added to the markets (equities) figures. Revenue from the Millenium Information Technology (MIT) business, previously recorded under data and analytics (workflows), have also been recategorised under markets (equities).

With these adjustments, LSEG’s equity revenues have drastically ‘increased’, overtaking European competitors Euronext and Deutsche Boerse by a considerable margin.

The group has stated that the changes have been made to better reflect how its business sectors are managed operationally.

While its market data feeds are now rolled into the equities business, LSEG’s main data and analytics business is driven by Workspace, a Bloomberg Terminal competitor to replace Eikon from 30th June. The data and analytics business reported €1.1 billion in Q2, down 10% from Q1 and up 1.9% YoY.

The cost of data is a contested topic, with reports by Market Structure Partners and Substantive Research published earlier this year alleging price gouging and excessive fee hikes across European exchanges.

Niki Beattie, CEO of Market Structure Partners, told Global Trading, “It is quite extraordinary that the regulation allows trading venues to generate data revenues separately from trading but does not expect them to account for it in a transparent manner. Instead, regulators have had to come up with a load of arbitrary guidelines about costs of production and margins but have no data in the accounts with which to reconcile the outcomes.”

Niki Beattie, CEO, Market Structure Partners

The sector was also subject to questions at Euronext, whose advanced data solutions business reported €65.2 million in Q2, up 7.5% YoY.

“This dynamic performance reflects the contribution of Global Rate Set Systems [acquired in 2023], strong appetite from retail and growing monetisation of diversified datasets,” the firm said.

During its earnings call, Euronext’s head of cash equity and data services Nicolas Rivard stated, “Over the last years we have been developing new products based on Euronext proprietary data. Some data providers are competing with our solutions, but our data is valuable for clients. Our data business is very competitive, there is still a strong demand from clients.”

CEO Stéphane Boujnah added, “We have a very strong, robust growing data business, which is based on fundamental needs of clients and not on far and aspirational expectations.”

Deutsche Boerse Group consolidates its market data revenues with other revenues including connectivity fees within the trading and clearing segment, and steers its executives away from mentioning it on earnings calls. In Q2, the ‘other’ category of financial derivatives, which includes “Eurex data and Eurex other”, generated a reported €60.2 million. In cash equities, ‘other’ – including “Xetra data, listing and Xetra other” – contributed €42 million of the sector’s overall €86.9 million in revenues.

Since Beattie’s report earlier this year, she said, “Issues persist and there has been no improvements around transparency. Disappointingly, the general consensus is that the recent European Commission consultation on the regulatory technical standards for the definition of reasonable commercial basis is unlikely to result in any changed language and will be implemented as is.”

She went on to warn that such practices could harm European competitiveness: “Policymakers who say they want innovation should follow through with actions that pave the way for growth. I increasingly speak to innovators who are going to the US to develop financial market products because it is too hard to get the data here.”

At Euronext, equity market revenue and income was up 9.5% YoY to €106.2 million, and down 2% QoQ. Equity markets were the second largest contributor to the group’s profits this quarter, behind the Capital Markets and Data Solutions business. Cash equity trading and clearing made up €93.4 million (a 16.2% YoY increase), while financial derivatives trading and clearing provided €12.8 million – a 22.9% decline YoY.

Although its €1.5 billion in Q2 net revenue was the strongest of the European exchange cohort, Deutsche Boerse’s cash equities revenues fell behind Euronext’s. The group reported €86.9 million, up 15% YoY and down 0.1% QoQ.

Deutsche Boerse stated, “Following a sharp equity market correction at the beginning of the second quarter of 2025 as a result of emerging trade conflicts, cash equity trading benefited overall from a combination of solid corporate data, stable macroeconomic conditions and continued high liquidity in the market. The German blue-chip index DAX reached a new all-time high at the beginning of June before the markets moved sideways in the further course of the quarter.”

Bachmann joins Verition

By

Lucy Carter

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August 5, 2025

Tania Bachmann, equity fund macro team, Verition Fund Management

Tania Bachmann has joined the equity macro team at Verition Fund Management. She is based in London.

The multi-strategy hedge fund is based in Connecticut and owned by Nicholas Maounis. Maounis founded the fund after his previous venture, Amaranth Advisors, went bankrupt in 2006.

As of April, Verition held US$12.6 billion in assets under management.

Bachmann has more than eight years of industry experience and joins Verition from PIMCO, where she was vice president of equity macro.

Woodford saga concludes with £45.8 million FCA fine

By

Lucy Carter

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August 5, 2025

Woodford Investment Management (WIM) has been fined £40 million for management failures of the Woodford Equity Income Fund (WEIF).

Manager Neil Woodford has been fined a further £5,888,800, and banned from holding senior manager roles and managing retail investors’ funds.

Joint executive director of enforcement and market oversight at the FCA Steve Smart commented, “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund. The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously.

“Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”

WEIF was suspended in June 2019. Its value was £3.6 billion at the time, falling from £10.1 billion in May 2017.

The FCA states that Woodford and WIM failed to react appropriately as the fund’s value declined and liquidity worsened, making unreasonable and inappropriate investment decisions. More liquid investments were sold and less liquid ones purchased over, resulting in just 8% of investments being able to be sold within seven days when the fund was suspended. At the time, rules stated that investors must be able to access their funds within four days.

As a result of poor management, the FCA says, investors who remained in the fund rather than withdrawing their investments before its suspension were disadvantaged.

Woodford’s lack of oversight of WIM’s relationship with WEIF’s authorised corporate director Link Fund Solutions was also noted by the FCA. Although it raised concerns about the fund’s liquidity, joint executive director of enforcement and market oversight Therese Chambers stated in 2024, “Link Fund Solutions’ job was to properly manage the Woodford Equity Income Fund and to protect investors’ interests. Their failings led to losses for those trapped in the fund when it was suspended.”

Niddam promoted at Soc Gen APAC

By

Lucy Carter

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August 4, 2025

Jerome Niddam, APAC CEO, Societe Generale

Jerome Niddam has been appointed CEO of Societe Generale Asia Pacific, effective 1 September.

SocGen’s global banking business and investor solutions business reported €2.6 billion in revenues for Q2, up 0.7% year-on-year (YoY). On a half-year basis, revenues were up 5.4% YoY to €5.5 billion.

Based in Hong Kong, Nidamm reports to Anne-Christine Champion and Alexandre Fleury, co-head of banking and investor solutions.

The duo stated, “The APAC region plays a key role in Societe Generale group’s growth strategy. Jerome [will] execute our ambitious roadmap and accelerate the development of our franchise.”

Niddam has been with Soc Gen since 2004, serving as head of capital markets for APAC since 2018. He will continue to oversee activities in the region until a replacement is found.

Prior to this, Niddam was head of financial engineering for equity derivatives in Japan and a financial engineer for equity derivatives in New York.

Chavali joins Citi in sponsor push

By

Lucy Carter

-

August 4, 2025

Vikram Chavali, APAC head of global asset managers, Citi

Citi has appointed Vikram Chavali as head of global asset managers (GAM) for the APAC region as it expands its presence in the financial sponsor and leveraged finance space.

In Q2 2025, Citi reported investment banking revenues of US$981 million, up 15% year-on-year (YoY). Within this, advisory fees were up 52%, which the firm stated was influenced by increased market share with financial sponsors.

Ashu Khullar, global head of GAM, commented, “Financial sponsors globally are driving a significant portion of the overall banking wallet and with Citi’s increased global focus on this important asset class, this underlines our ambitions to grow further with clients in Asia.”

Based in Hong Kong, he will take on the role later this year. He reports to Khullar and Jan Metzger, head of investment banking for the region.

With 20 years of industry experience, Chavali joins from Goldman Sachs where he was head of Asia ex-Japan sponsors mergers and acquisitions. He has been with the company since 2005.

Citi has made a slew of APAC appointments in recent months, with Akira Kiyota and Taiji Nagasaka named co-heads of investment banking for Japan last month.

In May and June, the Australia and New Zealand markets teams got a boost.

This Week from Trader TV: Bill Mann, Motley Fool Asset Management

By

GlobalTrading

-

August 4, 2025

AI capex lifts tech, but risks loom over infrastructure bottlenecks and tariff volatility.

A wave of AI-driven capital spending by major tech firms boosted US equities last week, following second-quarter earnings, but Bill Mann of Motley Fool Asset Management warns that infrastructure bottlenecks and shifting tariffs could pose significant headwinds. The chief investment officer shares his views on what supply chain issues and the shifting global tariff regimes could mean for tech valuations long term and urges investors to prioritise fundamentals, manage risk, and look beyond short-term market noise.

[This post was first published on Trader TV]

Cboe to exit Trading Technologies investment

By

Lucy Carter

-

August 1, 2025

Jill Griebenow, chief financial officer, Cboe

Cboe will no longer be an investor in Trading Technologies (TT) following parent company 7RIDGE’s partnership with Thoma Bravo.

In 2021, Cboe provided 40% of capital for the 7RIDGE fund owning TT.

SGX, also an investor in the 7RIDGE fund, noted that the fund would be wound up following the transaction.

In its results call, Jill Griebenow, chief financial officer at Cboe, commented, “This week, TT announced an investment transaction that is expected to result in Cboe fully exiting its investment in the 7RIDGE fund that currently owns TT.”

“Cboe expects the transaction to result in the gain recorded against the 30 June, 2025 carrying value of its investment in the 7RIDGE fund. While I cannot provide any incremental details around the potential gain until the transaction is complete, I will note that consistent with our historical treatment of minority investment gains and losses, we anticipate adjusting out any future impact incurred with the exit of this investment from our non GAAP metrics.”

Spitz to lead Flow Traders

By

Lucy Carter

-

August 1, 2025

Thomas Spitz, incoming CEO, Flow Traders

Flow Traders has named Thomas Spitz as CEO, effective 1 September, subject to shareholder approval.

He replaces Mike Kuehnel, who has been CEO for the past four years.

In 2024, Flow Traders reported €467.8 million in net trading income, up 56% year-on-year.

Also becoming executive director of the board, Spitz will be responsible for the firm’s overall growth and diversification strategy and trading capital expansion plan.

Spitz has more than 25 years of industry experience and joins Flow Traders from alternative data and analytics firm QuantCube Technology, where he has been CEO of the Middle East business since February. Prior to this, he was head of global markets and a senior managing director at First Abu Dhabi Bank.

More than 15 years of his career was spent at Credit Agricole CIB, where he held senior roles including global head of markets trading for FICC and equity derivatives and head of global market fixed income sales.

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When machines learn to trade like video gamers

Using AI doppelgangers to trade Chinese limit order books

Benchmarking Bloomberg’s TCA formula using agent-based modelling

Trading creates volatility

The toxic flow problem

Euronext reported a 7.5% year-on-year (YoY) data revenue increase. LSEG’s exchange data revenues have been combined with equities, flattering that segment. Deutsche Boerse buries its figures in the footnotes of its accounts. And industry experts are fuming about the lack of transparency.

Tania Bachmann has joined the equity macro team at Verition Fund Management. She is based in London.

Woodford Investment Management (WIM) has been fined £40 million for management failures of the Woodford Equity Income Fund (WEIF).

Jerome Niddam has been appointed CEO of Societe Generale Asia Pacific, effective 1 September.

Citi has appointed Vikram Chavali as head of global asset managers (GAM) for the APAC region as it expands its presence in the financial sponsor and leveraged finance space.

AI capex lifts tech, but risks loom over infrastructure bottlenecks and tariff volatility.

Cboe will no longer be an investor in Trading Technologies (TT) following parent company 7RIDGE’s partnership with Thoma Bravo.

Flow Traders has named Thomas Spitz as CEO, effective 1 September, subject to shareholder approval.

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