Brokerages serving individual investors received a windfall last year for selling their customers’ order flow to electronic trading firms, even as the practice faced increasing scrutiny from regulators.
The dozen largest U.S. brokerages earned a combined $3.8 billion for selling their customers’ stock and options orders last year, up 33% from 2020, according to new data compiled by Bloomberg Intelligence and released Tuesday.
Behind the boom was the groundswell of activity by individual investors during the Covid-19 pandemic. As more Americans opened brokerage accounts and swarmed into meme stocks and options, their brokers reaped more payment for order flow, as the practice is called.
Charles Schwab Corp. was the biggest recipient of such payments, collecting a combined $1.7 billion across its Schwab and TD Ameritrade…
