Mallika Mitra is a reporter at Money, covering investing trends, retirement, and debt. Her recent article, "Robinhood IPO: What to Know Before Investing," was published on June 2, 2021 based, in part, on Alphacution's ongoing analysis of Robinhood, its business model, and its impacts on the broader capital markets ecosystem.
In this introduction to the 17-page, 21-exhibit presentation – Part III of Alphacution’s case study on payment for order flow (PFOF) – we present our preliminary development of the “retail flow factor” for 2020 based largely on a reconciliation of 606 data (from 10 retail brokers / 11 entities) and 605 data (from 7 wholesale market makers). The results include estimated monthly penetration of retail order flow relative to the full U.S. cash equities market for 2020 – including estimated breakdowns of odd lots and round lots – as well as some hints on where we will need to look next to further refine this factor in preparation for extending this analysis throughout 2021 and beyond…
Alphacution expands upon an outstanding analysis by BestEx Research on PFOF with additional context on price improvement by leading wholesale market makers.
Inspired by reading Igor Tulchinsky's books - albeit a couple years late - Alphacution digs into some modeling to uncover a real world application of The UnRules...
Options powerhouse IMC Financial Markets scores some recent wins and, apparently, some losses, too. Alphacution shares its evidence...
In Part I of Alphacution’s case study on payment for order flow (PFOF), we focused mainly on the rates paid by wholesale market makers to retail brokers under a full range of securities categories and order type scenarios. In this 22-page, 20-exhibit deck, Alphacution presents PART II of its upcoming comprehensive case study, The Robinhood Effect, with a focus on a concept called broker personas. Alphacution’s working hypothesis on this topic is that each retail broker – in fact, all order flow intermediaries – have a unique persona. This persona – a unique pattern formed by order type distributions – is a distillation of client trading behaviors. In this presentation, Alphacution demonstrates that broker personas are partly due to investor demographics and, more interestingly, partly due to broker influence. Furthermore, when we broaden our perspective to consider that retail brokers are now compensated for trade flows largely by their wholesaler counterparts, we see a clearer picture of how desired outcomes could be manufactured…
Stephen Gandel, a contributor to CBS News and Moneywatch, published "Robinhood raked in at least $110 million from 'meme stock' rally" on May 7, 2021, in part based on Alphacution's analysis of Robinhood's Q1 2021 order routing revenue.
Expanding its footprint in US equities, XTX Markets drops its first 605 report for March 2021. Alphacution uses this event to make some comparisons and offer some interpretations about the evolving US equity market structure...
Robinhood's Q1 2021 PFOF data was made public over the weekend. Here are a few highlights...
In a world of ultra-fierce competition among proprietary traders, it has become increasingly challenging for newer, smaller players to succeed. We have been keeping a close eye on two players who appear to be bucking this trend above the rest. One of them is option market maker, Simplex Trading. In this Feed post, Alphacution showcases the latest 13F reporting to test for signals of Simplex's ongoing success...
