Do they directly put limit orders on the order book? Or do they automatically fill limit/market orders from customers and have offsetting position with their market maker(LP) to offset their net position?

  • $\begingroup$ "A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange". So strictly speaking a broker does not provide liquidity, they pass the trade to a trading venue (exchnage) for execution there. There are some exceptions, so called internalization where the broker in some cases executes a trade between 2 different customers, but that is unusual. A broker normally is just an intermediary, who is electronically connected to exchanges on one side and to the customer on the other. $\endgroup$
    – nbbo2
    Feb 20, 2022 at 11:14
  • $\begingroup$ Thanks, I wanna ask one more question if you don’t mind… can “payment for order flow” happen on non-OTC market? I thought since brokers on non-OTC market have obligation to get its customers best execution price, it’s meaningless for dealers(market maker) to pay brokers for the order flow for dealers to make “spread profit” from. Because even if a dealer pays brokers for the order flow, if he isn’t the one quoting the best prices, he won’t get the orders anyway. Isn’t it true? $\endgroup$
    – Kmd
    Feb 20, 2022 at 14:32


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