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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?

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Best execution does not mean best execution on every trade. In addition delays and weaknesses in calculating the NBBO (National Best Bid and Offer), delays in transmission speeds for limit orders from mobile aps and execution rules for odd-lot trades all impact execution to the detriment of the investor.

Read below one simple example of why your statement above is incorrect

https://www.marketwatch.com/story/commission-free-stock-market-trading-on-some-platforms-may-be-raising-costs-and-volatility-for-all-of-us-11645017928

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  • $\begingroup$ Thanks, but doesn’t it say off-exchange which is otc market? $\endgroup$
    – Kmd
    Feb 21, 2022 at 14:54

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