(( Note: This information was removed by mods on WSB. It has since been complete wiped somehow (even removeddit.com shows [removed]). You can see the original (now deleted) post here. WSB didn’t want this to be public knowledge. It will not be removed from here, so it’s safe to link to. ))
Robinhood’s primary business model is selling your buy/sell order flow to market makers, particularly Citadel. Your trading actions (like buying and selling) is given to AI that can crunch your trade data (and everyone else’s) in microseconds, which can then place new orders BEFORE your trades get placed.
As an example: you click “go” to purchase 100 stocks. That data gets sent to an AI trading algorithm. The AI then buys 500 stocks first, raising the stock price in the process. THEN your order gets processed (at the higher amount), raising the price once again. The AI can then sells those 500 stocks at the even higher price, profiting off of that transaction by taking your earnings.
This is unfortunately a legal process, but they are required by law (from the SEC) to provide details of that data. (Credit to u/martinvandepas).
Robinhood on its Order Flow sales:
RHS receives remuneration for directing orders to particular brokerdealers or market centers for execution. Such remuneration is considered compensation to the firm. The source and nature in connection with your transactions are available upon written request. RHF, when clearing through RHS, may share in such payments or may directly receive payment for order flow for certain transactions.
Upon written request and where available, further details of items herein will be provided including: the execution date and time, the counterparty when acting as agent, the detailed breakdown of fees and the remuneration details, if any, to RHS, or RHF for directing orders to select market participants and details of provisions that may cause a call or prepayment.
In the Robinhood app, go to Account -> Contact Us -> “I have a different question” -> “Documents and Taxes” -> “Trade Confirmations” -> “Contact Us” and ask something like this:
Please send me all information available about my trades this year. Please include: the execution date and time, the counterparty when acting as agent, the detailed breakdown of fees and the remuneration details (including all available parties involved), and any additional information on directing orders to select market participant and details of provisions that may cause a call or prepayment.
For further verification of what I’m asking, here is the SEC rule 606 in its entirety: https://www.law.cornell.edu/cfr/text/17/242.606. Please read section (b)(3). This is the information I am requesting. It also states that this information must be provided within 7 days of my request, so time is of the essence. Thank you.
You can also ask for alternative dates (rather than just “this year”).
If Robinhood takes too long, you can request this through CFPB (Consumer Financial Protection Bureau) to require it within 15 days.
You can file the complaint at https://www.consumerfinance.gov/complaint/, indicating that Robinhood has not fulfilled their required legal duty to provide this information. This provides legal groundwork that Robinhood MUST fulfill.
This information becoming more public will almost certainly help traders learn more about what’s really going on behind the curtain. Posts like this should NOT be purged from WSB, but that is what we’re dealing with now.