Why are liquidity suppliers willing to provide "price improvements" when executing orders?
Why are liquidity suppliers willing to provide "price improvements" when executing orders?
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Flux · External communityPost link
External question — Personal Finance Stack Exchange
Author: Flux
Original post: https://money.stackexchange.com/questions/133103
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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US stock brokers often boast of "price improvement" when speaking of their order execution quality. e.g. "95% of executed market orders received prices better than the National Best Bid and Offer (NBBO)".
How does this price improvement even exist? Aren't stock brokers and their liquidity suppliers profit-maximizing firms? Why don't the liquidity suppliers take away the price improvement to make more profits?
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: Flux Source score (net votes, not local likes): 2 Original post: https://money.stackexchange.com/questions/133103 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. US stock brokers often boast of "price improvement" when speaking of their order execution quality. e.g. "95% of executed market orders received prices better than the National Best Bid and Offer (NBBO)". How does this price improvement even exist? Aren't stock brokers and their liquidity suppliers profit-maximizing firms? Why don't the liquidity suppliers take away the price improvement to make more profits?
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