1 00:00:11,119 --> 00:00:14,600 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,640 --> 00:00:17,960 Speaker 1: I'm Joe Wisn't Thal and I'm Tracy. Tracy. I have 3 00:00:18,040 --> 00:00:22,680 Speaker 1: a question about things in Hong Kong, which is, are 4 00:00:22,720 --> 00:00:25,079 Speaker 1: people going crazy for stock trading there the way they 5 00:00:25,120 --> 00:00:28,720 Speaker 1: are here? It's a good question. I'm not sure if 6 00:00:28,760 --> 00:00:31,720 Speaker 1: this is reflected in Hong Kong, but definitely in mainland 7 00:00:31,840 --> 00:00:36,760 Speaker 1: China We've had this massive rally in Chinese shares, So yeah, 8 00:00:37,000 --> 00:00:39,440 Speaker 1: over there we're having like a similar retail boom to 9 00:00:39,560 --> 00:00:42,360 Speaker 1: what we have seen in the US. Yeah, I mean 10 00:00:42,400 --> 00:00:44,159 Speaker 1: it's pretty crazy. I mean that has been you know, 11 00:00:44,200 --> 00:00:47,600 Speaker 1: there's a lot of like subplots to this crisis. In fact, 12 00:00:47,640 --> 00:00:50,920 Speaker 1: that's sort of the theme of our podcast over the 13 00:00:50,960 --> 00:00:53,720 Speaker 1: last several months, is just exploring all of the subplots. 14 00:00:53,760 --> 00:00:58,360 Speaker 1: But the the incredible boom that we've seen in retail 15 00:00:58,440 --> 00:01:01,920 Speaker 1: trading activity has to be one of the more surprising ones. 16 00:01:01,960 --> 00:01:03,520 Speaker 1: And of course the whole you know, it's the whole 17 00:01:03,600 --> 00:01:06,880 Speaker 1: robin hood phenomenon. All these people their home, they're not 18 00:01:07,400 --> 00:01:10,600 Speaker 1: their jobs, there's no sports betting going on, and so 19 00:01:10,680 --> 00:01:12,559 Speaker 1: it's like, all right, well I got a few bucks 20 00:01:12,600 --> 00:01:15,959 Speaker 1: laying around, maybe I'll bet on some Tesla shares for 21 00:01:16,040 --> 00:01:19,200 Speaker 1: free on robin Hood. Yeah. I think that's it, isn't it. 22 00:01:19,200 --> 00:01:22,319 Speaker 1: It's it's not it's not necessarily that retail investors are 23 00:01:22,400 --> 00:01:25,199 Speaker 1: jumping into the stock market. It's the way in which 24 00:01:25,240 --> 00:01:28,600 Speaker 1: they're doing that. Because we have commission free trading now, 25 00:01:29,040 --> 00:01:31,319 Speaker 1: you can kind of take a punt on a bunch 26 00:01:31,360 --> 00:01:36,560 Speaker 1: of stuff without necessarily losing that much money, at least upfront, 27 00:01:36,920 --> 00:01:39,520 Speaker 1: I guess. And like the punts that we are seeing. 28 00:01:40,120 --> 00:01:45,640 Speaker 1: Tesla hurts switched to Clared bankruptcy. Everyone's been talking about those, 29 00:01:45,680 --> 00:01:50,240 Speaker 1: and I think that really that really stands out right now. Yeah. Absolutely. 30 00:01:50,520 --> 00:01:53,000 Speaker 1: I remember like last year, I think it was it 31 00:01:53,040 --> 00:01:55,960 Speaker 1: was last year and Charles Schwab announced that who was 32 00:01:55,960 --> 00:01:59,200 Speaker 1: going to cut commissions to zero, and a bunch of 33 00:01:59,200 --> 00:02:02,720 Speaker 1: other online broker bridges followed suit, and my first though 34 00:02:02,800 --> 00:02:04,400 Speaker 1: was like, oh boy, like, people are gonna lose a 35 00:02:04,400 --> 00:02:06,880 Speaker 1: ton of money because they're gonna overtrade, and some people 36 00:02:06,960 --> 00:02:09,320 Speaker 1: probably are. But the weird thing is that a bunch 37 00:02:09,360 --> 00:02:12,000 Speaker 1: of people who jumped into the market over the last 38 00:02:12,040 --> 00:02:15,000 Speaker 1: several months have actually participated in one of the most 39 00:02:15,000 --> 00:02:18,359 Speaker 1: extraordinary rallies we've seen of all time. So for now, 40 00:02:18,520 --> 00:02:21,240 Speaker 1: some people are clearly winning. Yeah, But the other part 41 00:02:21,280 --> 00:02:25,400 Speaker 1: of the story is, I guess the downsides of retail participation, 42 00:02:25,520 --> 00:02:28,080 Speaker 1: or not the downsides, but the criticism that comes along 43 00:02:28,120 --> 00:02:31,160 Speaker 1: with it. So obviously a lot of people have been 44 00:02:31,600 --> 00:02:34,920 Speaker 1: making fun of people who are buying Tesla stock or 45 00:02:35,280 --> 00:02:39,520 Speaker 1: bankrupt company stock. We've also had some criticism of some 46 00:02:39,600 --> 00:02:44,440 Speaker 1: of the trading platforms, but particularly robin Hood, which seems 47 00:02:44,440 --> 00:02:49,480 Speaker 1: to be at the at the forefront of commission free trading. Right, 48 00:02:49,600 --> 00:02:52,520 Speaker 1: robin Hood has sort of become it's kind of like 49 00:02:52,600 --> 00:02:55,680 Speaker 1: become like the like band aid or Kleenex. It's like 50 00:02:55,680 --> 00:02:59,359 Speaker 1: this brand, but it also is synonymous with a phenomenon 51 00:02:59,440 --> 00:03:01,320 Speaker 1: or an industry, you where lots of people are getting 52 00:03:01,639 --> 00:03:06,760 Speaker 1: into trading and this whole commission free retail craze it also, 53 00:03:07,240 --> 00:03:10,760 Speaker 1: um you know, raises some questions in addition to just 54 00:03:10,760 --> 00:03:13,480 Speaker 1: sort of the retail side, about how the industry is 55 00:03:13,560 --> 00:03:17,040 Speaker 1: making money and who is really the big winner here, 56 00:03:17,040 --> 00:03:19,680 Speaker 1: Because sure, there are some people that have probably turned 57 00:03:19,680 --> 00:03:22,760 Speaker 1: a little bit of money into um, you know, millions 58 00:03:22,840 --> 00:03:27,320 Speaker 1: thanks to investing in buying call options on Tesla, but 59 00:03:27,520 --> 00:03:29,720 Speaker 1: also a lot of people are just are making a 60 00:03:29,760 --> 00:03:33,720 Speaker 1: lot of money just handling this incredible order flow, this 61 00:03:33,880 --> 00:03:37,440 Speaker 1: incredible activity. And obviously with commissions having gone to zero, 62 00:03:37,560 --> 00:03:40,760 Speaker 1: the business model has changed a little bit safe from 63 00:03:41,040 --> 00:03:43,960 Speaker 1: the late nineties when the online brokers say like charged 64 00:03:44,040 --> 00:03:47,000 Speaker 1: just fourteen dollars a trade or whatever it was, right, 65 00:03:47,120 --> 00:03:50,040 Speaker 1: so there's no free lunch and economics, there's supposed to 66 00:03:50,040 --> 00:03:52,520 Speaker 1: be no free lunch when it comes to trading. But 67 00:03:52,680 --> 00:03:56,960 Speaker 1: clearly retail investors are getting you know, commission free trades, 68 00:03:57,400 --> 00:03:59,800 Speaker 1: and yet someone must be making money off of those. 69 00:04:00,200 --> 00:04:02,680 Speaker 1: How are they doing it? Exactly? And again that kind 70 00:04:02,680 --> 00:04:05,560 Speaker 1: of feeds into some of the criticism that we've seen 71 00:04:05,600 --> 00:04:08,800 Speaker 1: around the robin Hood platform. Yeah, exactly right. So that's 72 00:04:08,800 --> 00:04:11,520 Speaker 1: what we're going to dive into today, like who's really 73 00:04:12,040 --> 00:04:15,840 Speaker 1: making money off of all this activity? How sustainable it is, 74 00:04:16,640 --> 00:04:20,719 Speaker 1: what the new business models of online brokerage really look like. 75 00:04:20,880 --> 00:04:24,919 Speaker 1: And so we're going to be talking to a great guest. 76 00:04:24,960 --> 00:04:27,039 Speaker 1: He's actually with us at Bloomberg. He's the head of 77 00:04:27,080 --> 00:04:32,520 Speaker 1: market structure research at Bloomberg Intelligence. Larry tab is joining 78 00:04:32,600 --> 00:04:36,560 Speaker 1: us to explain the sort of the new retail online 79 00:04:36,560 --> 00:04:39,800 Speaker 1: broken landscape. Who's making money out Larry, Thank you very 80 00:04:39,880 --> 00:04:43,400 Speaker 1: much for joining us, Joe and Tracy. I'm really happy 81 00:04:43,400 --> 00:04:45,599 Speaker 1: to be here. It's great to be here. Thanks. How 82 00:04:45,680 --> 00:04:50,320 Speaker 1: surprising or weird is this moment? You've been examining the 83 00:04:50,360 --> 00:04:53,760 Speaker 1: world of market structure for a long time. How crazy 84 00:04:53,800 --> 00:04:56,880 Speaker 1: are things right now? From your perspective, that's pretty insane, 85 00:04:57,279 --> 00:04:58,800 Speaker 1: you know, if you look at if you look at 86 00:04:58,800 --> 00:05:02,760 Speaker 1: equity volumes. While we didn't hit a record during during 87 00:05:02,800 --> 00:05:06,120 Speaker 1: February March, we you know, in terms of share volume, 88 00:05:06,279 --> 00:05:09,960 Speaker 1: we pretty much almost doubled the amount of notional traded 89 00:05:10,040 --> 00:05:11,360 Speaker 1: and that has a lot to do with the lack 90 00:05:11,400 --> 00:05:15,560 Speaker 1: of stock splits. But um, the amount of value turning 91 00:05:15,600 --> 00:05:20,600 Speaker 1: over is just phenomenal, given given traditional history, and even 92 00:05:20,839 --> 00:05:23,680 Speaker 1: this is through the global financial crisis, through the dot 93 00:05:23,720 --> 00:05:27,839 Speaker 1: com meltdown, the volume has just been astronomical. And and 94 00:05:27,920 --> 00:05:31,120 Speaker 1: actually the other thing you got to go provide kudos too, 95 00:05:31,279 --> 00:05:35,679 Speaker 1: is the market infrastructure. We really haven't seen now. Robin 96 00:05:35,720 --> 00:05:37,719 Speaker 1: Hood was was down for a day or so, but 97 00:05:37,800 --> 00:05:40,720 Speaker 1: other than that, you know, you've seen very few outages 98 00:05:40,960 --> 00:05:44,360 Speaker 1: and and and given all the volume, and especially over 99 00:05:44,400 --> 00:05:48,880 Speaker 1: a prolonged period, the brokers, the exchanges, the infrastructure providers 100 00:05:48,920 --> 00:05:51,440 Speaker 1: have really done a great job keeping up with it. 101 00:05:52,040 --> 00:05:54,799 Speaker 1: I mean, robin Hood was down at a pretty critical 102 00:05:54,839 --> 00:05:58,080 Speaker 1: time in retrospect. But before we get into all of that, 103 00:05:58,360 --> 00:06:01,000 Speaker 1: what do you think is driving through retail interest in 104 00:06:01,320 --> 00:06:03,880 Speaker 1: stock trading at the moment. Is it as simple as 105 00:06:03,920 --> 00:06:06,720 Speaker 1: everyone being stuck at home and having nothing to do, 106 00:06:06,880 --> 00:06:10,880 Speaker 1: or is it people who saw the federal reserve response 107 00:06:11,000 --> 00:06:13,800 Speaker 1: and assume that it would lead to a big rally 108 00:06:13,960 --> 00:06:16,839 Speaker 1: in risk assets or is it something else. I think 109 00:06:16,839 --> 00:06:19,880 Speaker 1: you've got a couple of different factors going on. First, 110 00:06:19,960 --> 00:06:22,760 Speaker 1: I think the initial issue was a freak alpium that 111 00:06:22,839 --> 00:06:26,359 Speaker 1: everybody realized that, hey, the the economy may come to 112 00:06:26,400 --> 00:06:29,520 Speaker 1: an end, and you know, we might have this pandemic 113 00:06:29,560 --> 00:06:32,880 Speaker 1: of global proportions that they kind of erect the economy. 114 00:06:32,960 --> 00:06:34,560 Speaker 1: And so I think a lot of people got on 115 00:06:34,760 --> 00:06:37,680 Speaker 1: sold a lot that you know, that would would explain 116 00:06:37,720 --> 00:06:40,440 Speaker 1: a lot of the big dips and reallocate their portfolios. 117 00:06:41,200 --> 00:06:44,040 Speaker 1: Then I think, you know, the economy started shutting down 118 00:06:44,040 --> 00:06:46,320 Speaker 1: in mid March. People were stuck at home, there was 119 00:06:46,360 --> 00:06:49,760 Speaker 1: no sports, there was no there was no nothing um 120 00:06:49,839 --> 00:06:51,880 Speaker 1: and you still had a lot of volatility. And then 121 00:06:51,920 --> 00:06:53,960 Speaker 1: I think you start getting into this whole you know, 122 00:06:54,040 --> 00:06:56,560 Speaker 1: I'm stuck at home. What do I do? And then 123 00:06:56,560 --> 00:06:58,960 Speaker 1: you've got also a lot of professionals that are also 124 00:06:59,080 --> 00:07:01,560 Speaker 1: stuck at home with nothing going on and a lot 125 00:07:01,560 --> 00:07:05,680 Speaker 1: of volatility. And then you start seeing things like Amazon. Oh, 126 00:07:05,760 --> 00:07:08,240 Speaker 1: you know, I'm gonna go. I'm gonna go buy everything 127 00:07:08,240 --> 00:07:10,280 Speaker 1: from Amazon. It's going to come the next day. So 128 00:07:10,320 --> 00:07:14,800 Speaker 1: you've got logistics pops, You've got you online pops, and 129 00:07:14,880 --> 00:07:19,440 Speaker 1: you've got the hotels you know, and entertainment sector shutting down, 130 00:07:19,480 --> 00:07:23,720 Speaker 1: so you have a lot of interesting plays and thoughts around, hey, look, 131 00:07:24,160 --> 00:07:26,680 Speaker 1: this sector may actually do really well, but the sector 132 00:07:26,760 --> 00:07:29,400 Speaker 1: might actually do very poorly. So you've got some real 133 00:07:29,440 --> 00:07:33,080 Speaker 1: directional bets. Whereas over the last decade it's really, you know, 134 00:07:33,120 --> 00:07:37,160 Speaker 1: the secret to life has mostly been throw everything in 135 00:07:37,200 --> 00:07:40,240 Speaker 1: the sp five and just let it grow. So now 136 00:07:40,280 --> 00:07:43,600 Speaker 1: you actually have directional bets that you can play, and 137 00:07:43,960 --> 00:07:46,040 Speaker 1: so I think you've got to You've got a whole 138 00:07:46,120 --> 00:07:49,680 Speaker 1: bunch of factors. Plus, of course, you know, commission free brokers. 139 00:07:49,720 --> 00:07:52,680 Speaker 1: We started to see the you know, in December, when 140 00:07:52,680 --> 00:07:55,080 Speaker 1: we started to see Schwab and the other guys kind 141 00:07:55,080 --> 00:07:58,480 Speaker 1: of throwing the talent commissions. You start to actually see 142 00:07:58,520 --> 00:08:02,520 Speaker 1: the retail participation tick off. Actually, then it didn't just 143 00:08:02,600 --> 00:08:06,720 Speaker 1: happen in February March. It really started December when when 144 00:08:06,760 --> 00:08:24,240 Speaker 1: folks brought their commissions down to zero. Actually, I want 145 00:08:24,240 --> 00:08:26,920 Speaker 1: to back up for a second. So we introduced you 146 00:08:27,240 --> 00:08:31,440 Speaker 1: as the head of market structure research at Bloomberg Intelligence. 147 00:08:31,880 --> 00:08:34,920 Speaker 1: But UM, talk to us a little bit about your background, 148 00:08:35,480 --> 00:08:39,120 Speaker 1: but also market structure What does that mean? I don't 149 00:08:39,120 --> 00:08:42,440 Speaker 1: know if like that term is a particular one that 150 00:08:42,520 --> 00:08:45,120 Speaker 1: people have a grasp on when they hear it. And 151 00:08:45,160 --> 00:08:49,520 Speaker 1: why is it something that itself should needs to be understood? 152 00:08:49,760 --> 00:08:53,120 Speaker 1: Why why you should people know more about the sort 153 00:08:53,160 --> 00:08:56,640 Speaker 1: of vague, big picture concept of market structure and why 154 00:08:56,720 --> 00:09:00,079 Speaker 1: is it worth researching? Well, certainly my wife doesn't understand it, 155 00:09:00,440 --> 00:09:04,800 Speaker 1: but market structure researches is basically not necessarily what people 156 00:09:04,800 --> 00:09:08,679 Speaker 1: are buying and selling and whether IBM is expensive or cheap. 157 00:09:08,800 --> 00:09:12,720 Speaker 1: It's how all of the infrastructure fits together. So it 158 00:09:12,840 --> 00:09:14,439 Speaker 1: used to be, you know, we used to have a 159 00:09:14,480 --> 00:09:18,640 Speaker 1: New York Stock Exchange floor and people wandered around and 160 00:09:18,679 --> 00:09:23,680 Speaker 1: negotiated and we're specialists and floor brokers. Um. And then 161 00:09:24,040 --> 00:09:27,280 Speaker 1: NASTAC was over the counter, mostly traded on traders desks. 162 00:09:28,080 --> 00:09:31,120 Speaker 1: But over the last twenty years, basically all of this 163 00:09:31,240 --> 00:09:35,760 Speaker 1: has been electronified. And so we now have thirteen fourteen 164 00:09:35,840 --> 00:09:40,199 Speaker 1: exchanges soon to be sixteen exchanges. In US equities, we 165 00:09:40,240 --> 00:09:44,640 Speaker 1: have sixteen options exchanges. And the pricing structure and how 166 00:09:44,679 --> 00:09:47,559 Speaker 1: all this fits together and how do they connect and 167 00:09:47,720 --> 00:09:49,880 Speaker 1: who do you route to first, and what types of 168 00:09:50,000 --> 00:09:53,040 Speaker 1: orders do you put where? And how do you measure 169 00:09:53,200 --> 00:09:56,400 Speaker 1: whether you're you're getting a good fill or not. That's 170 00:09:56,440 --> 00:09:58,599 Speaker 1: all it has to do with all the rules and 171 00:09:59,080 --> 00:10:03,760 Speaker 1: mechanisms the markets are engaged to actually match fib consellers together. 172 00:10:03,760 --> 00:10:06,760 Speaker 1: And this occurs not just in U S dequities, but 173 00:10:07,400 --> 00:10:10,120 Speaker 1: fixed income. You're starting to see electronification of the fixed 174 00:10:10,120 --> 00:10:14,599 Speaker 1: income markets, and that's much more complicated and fragmented than equities, 175 00:10:15,040 --> 00:10:18,240 Speaker 1: UM and foreign exchange and and so you're seeing the 176 00:10:18,320 --> 00:10:22,840 Speaker 1: movement and the electronification of all of these markets, and 177 00:10:22,920 --> 00:10:25,720 Speaker 1: it has tremendous ramifications in terms of how your orders 178 00:10:25,720 --> 00:10:29,520 Speaker 1: are executed. And so that's that's basically what market structure researches. 179 00:10:29,600 --> 00:10:32,960 Speaker 1: So it starts with the rules and regulations and then 180 00:10:33,040 --> 00:10:36,160 Speaker 1: translates into how all of these rules from regulations are 181 00:10:36,160 --> 00:10:40,480 Speaker 1: adopted through exchanges and and the market infrastructure. I gotta 182 00:10:40,520 --> 00:10:42,760 Speaker 1: say I used to call Larry up quite a bit 183 00:10:42,760 --> 00:10:45,280 Speaker 1: when I was writing market structure stories over at the FT, 184 00:10:45,480 --> 00:10:48,920 Speaker 1: and he was always very generous with his time and insightful. 185 00:10:49,040 --> 00:10:53,200 Speaker 1: So thank you, Larry. Um, let's connect the market structure 186 00:10:53,480 --> 00:10:58,160 Speaker 1: argument to what's going on with the commission free brokerages 187 00:10:58,280 --> 00:11:02,960 Speaker 1: or trading offers I mentioned in the intro. There's this 188 00:11:03,000 --> 00:11:06,559 Speaker 1: weird thing. You're offering someone the ability to trade for free, 189 00:11:06,800 --> 00:11:11,560 Speaker 1: but obviously that trade is generating a cost somewhere in 190 00:11:11,600 --> 00:11:16,280 Speaker 1: the system. So how exactly are those trades being funded? Yes, 191 00:11:16,360 --> 00:11:20,400 Speaker 1: so this is really an interesting topic, and so at 192 00:11:20,400 --> 00:11:24,040 Speaker 1: the very highest level it sounds really fishy. Um, you 193 00:11:24,080 --> 00:11:28,440 Speaker 1: mean that market makers and wholesalers are actually paying to 194 00:11:28,600 --> 00:11:32,640 Speaker 1: execute against my trades as a retail broker there as 195 00:11:32,640 --> 00:11:35,920 Speaker 1: a retail investor. How can that be good? They must 196 00:11:35,920 --> 00:11:38,680 Speaker 1: know something that I don't know. They must be ripping 197 00:11:38,679 --> 00:11:41,040 Speaker 1: me off, They must be giving, you know, getting me 198 00:11:41,080 --> 00:11:45,880 Speaker 1: a horrible execution. Um, this can't be right. Actually, though, 199 00:11:46,120 --> 00:11:49,839 Speaker 1: it's not necessarily as nefarious as it all sounds. And 200 00:11:49,880 --> 00:11:52,600 Speaker 1: first of all, there are two different payment for order 201 00:11:52,600 --> 00:11:55,880 Speaker 1: flow screens. First there's equities, which which works one way, 202 00:11:55,920 --> 00:11:58,720 Speaker 1: and then there's options, which actually is a whole different 203 00:11:58,760 --> 00:12:01,520 Speaker 1: way that's a little more challenging. What we can talk 204 00:12:01,559 --> 00:12:03,360 Speaker 1: a little bit that about that if we have time, 205 00:12:03,920 --> 00:12:08,079 Speaker 1: um the equity side, So think about equities and think 206 00:12:08,080 --> 00:12:11,080 Speaker 1: about an electronic platform. So at the heart of an 207 00:12:11,160 --> 00:12:14,439 Speaker 1: electronic matching platform that works in microseconds, and all of 208 00:12:14,520 --> 00:12:18,760 Speaker 1: these exchanges now execute in microseconds, if not quicker than microseconds, 209 00:12:18,760 --> 00:12:23,520 Speaker 1: basically hundreds of nanoseconds, which is an unfathomably fast amount 210 00:12:23,559 --> 00:12:26,480 Speaker 1: of time. So me, as a market maker, what what 211 00:12:26,520 --> 00:12:29,360 Speaker 1: am I doing? I'm putting out a bid the buy 212 00:12:29,480 --> 00:12:34,400 Speaker 1: or sell Apple, okay, And and so all of these 213 00:12:34,600 --> 00:12:38,959 Speaker 1: really smart, really high frequency trading firms are looking at 214 00:12:39,000 --> 00:12:41,360 Speaker 1: my quote to buy or sell Apple and trying to 215 00:12:41,440 --> 00:12:46,320 Speaker 1: determine if that's the appropriate price for this nanosecond basically 216 00:12:46,360 --> 00:12:50,520 Speaker 1: for this microsect and if it's wrong, it's either not 217 00:12:50,520 --> 00:12:52,520 Speaker 1: going to trade if I'm too high or too low. 218 00:12:52,559 --> 00:12:55,360 Speaker 1: But if I'm too aggressive, I'm gonna get taken out 219 00:12:55,480 --> 00:12:58,960 Speaker 1: in that in a heartbeat, in in the microsection. So 220 00:12:59,800 --> 00:13:03,240 Speaker 1: me as a market maker, I have to you know, 221 00:13:03,360 --> 00:13:07,160 Speaker 1: if I'm trading on lad exchanges. I have to ensure 222 00:13:07,240 --> 00:13:11,080 Speaker 1: that I'm really confident in my quote, and confident in 223 00:13:11,080 --> 00:13:13,880 Speaker 1: that my quote not just in terms of trace here 224 00:13:13,960 --> 00:13:17,839 Speaker 1: Joe or Larry trading against that quote, but confident in 225 00:13:17,920 --> 00:13:22,359 Speaker 1: that quote for a big, huge mutual funds, high frequency traders, 226 00:13:22,720 --> 00:13:24,880 Speaker 1: and the smartest hedge funds in the world to trade 227 00:13:24,880 --> 00:13:28,520 Speaker 1: against that quote. Um, because the second that i'm you know, 228 00:13:28,559 --> 00:13:31,480 Speaker 1: are the microseconds that I'm wrong, I'm gonna get taken out. 229 00:13:31,840 --> 00:13:34,120 Speaker 1: So the quote that I provide really has to be 230 00:13:34,160 --> 00:13:38,560 Speaker 1: an institutional quote, a quote that that you know, hedge 231 00:13:38,559 --> 00:13:41,960 Speaker 1: funds and mutual funds need to think, Okay, you know 232 00:13:42,040 --> 00:13:45,600 Speaker 1: that's a fair quote, not too aggressive, not to to lose. 233 00:13:46,559 --> 00:13:50,360 Speaker 1: That said, the reason why, um, they're thinking that is 234 00:13:50,400 --> 00:13:53,920 Speaker 1: because they're trying to buy thousands of not hundreds of thousands, 235 00:13:54,000 --> 00:13:57,800 Speaker 1: if not millions, of shares. You and I are are 236 00:13:57,840 --> 00:14:00,840 Speaker 1: trying to buy a hundred shares are increasingly less than 237 00:14:00,840 --> 00:14:03,679 Speaker 1: a hundred shares. But that's a whole another topic about 238 00:14:03,679 --> 00:14:07,439 Speaker 1: AUTI loots to promote the title of this podcast, in effect, 239 00:14:07,880 --> 00:14:11,760 Speaker 1: because you're in my order is for a fraction of 240 00:14:11,840 --> 00:14:16,920 Speaker 1: the shares of Fidelity or Capital Group or Bridgewater or 241 00:14:16,920 --> 00:14:20,440 Speaker 1: whoever's trying to buy, I can price you're in my 242 00:14:20,680 --> 00:14:23,800 Speaker 1: order tighter because you know, because I don't have you know, 243 00:14:23,880 --> 00:14:26,840 Speaker 1: because Larry doesn't have a million shares after that first 244 00:14:26,920 --> 00:14:30,560 Speaker 1: hundred share share order behind it. So if you think 245 00:14:30,560 --> 00:14:32,800 Speaker 1: about supply and demand, what does the market do? E 246 00:14:32,800 --> 00:14:35,080 Speaker 1: gauges supply and demand, And if there's not a whole 247 00:14:35,080 --> 00:14:38,520 Speaker 1: lot of supply or demand, then the price should not 248 00:14:38,640 --> 00:14:41,360 Speaker 1: change that much um Whereas if there's a lot of 249 00:14:41,360 --> 00:14:43,720 Speaker 1: supplying demand that the price will change a fair amount. 250 00:14:44,400 --> 00:14:49,840 Speaker 1: But theoretically, actually retail trades should actually price more aggressively 251 00:14:49,960 --> 00:14:53,320 Speaker 1: than than the larger orders. And that's kind of the 252 00:14:53,320 --> 00:14:57,240 Speaker 1: theory behind aiming for order flow, that a market maker 253 00:14:57,280 --> 00:15:02,840 Speaker 1: could actually priced mire your shares better then they can 254 00:15:02,840 --> 00:15:07,040 Speaker 1: price a large mutual funder heads fund. And the savings 255 00:15:07,080 --> 00:15:11,560 Speaker 1: that gets split three ways. It gets split up into 256 00:15:12,000 --> 00:15:15,320 Speaker 1: price improvement, which basically means that they're gonna they're gonna 257 00:15:15,360 --> 00:15:18,600 Speaker 1: give me the customer a better price. They're going to 258 00:15:18,880 --> 00:15:23,280 Speaker 1: pay a few cents to the broker that the retail 259 00:15:23,360 --> 00:15:25,720 Speaker 1: broker who were outed that water flow to them, and 260 00:15:25,760 --> 00:15:28,800 Speaker 1: that's the payment for water flow part. And then the 261 00:15:28,840 --> 00:15:32,160 Speaker 1: third part of course, is the wholesaler's profit. And so 262 00:15:32,360 --> 00:15:35,840 Speaker 1: that is if you think about it, that that's that's 263 00:15:35,880 --> 00:15:40,160 Speaker 1: the philosophy behind internalization and equity payment for water flow. 264 00:15:41,440 --> 00:15:44,600 Speaker 1: All right, there's a lot there, So let's try to 265 00:15:44,800 --> 00:15:47,920 Speaker 1: unpack it a little bit further. So you've made this 266 00:15:48,000 --> 00:15:51,680 Speaker 1: distinction between say, if if me or Tracy you want 267 00:15:51,680 --> 00:15:56,560 Speaker 1: to buy ten shares of apple Um, then the market 268 00:15:56,640 --> 00:15:59,600 Speaker 1: maker at the other end can price you, said, I 269 00:15:59,600 --> 00:16:03,800 Speaker 1: think more aggressively or give a so a narrower spread 270 00:16:03,800 --> 00:16:07,480 Speaker 1: because they feel more confident. Yeah, because because you're not 271 00:16:07,480 --> 00:16:09,480 Speaker 1: going to come on the back of that with another 272 00:16:09,520 --> 00:16:17,000 Speaker 1: hundred another hundred an ad shares. So when Schwab last 273 00:16:17,120 --> 00:16:20,960 Speaker 1: year announced that they were going to go commission free, 274 00:16:20,960 --> 00:16:23,080 Speaker 1: everyone's like, yeah, well they can do it because they 275 00:16:23,080 --> 00:16:27,440 Speaker 1: have this huge float of other assets and they make 276 00:16:27,480 --> 00:16:29,920 Speaker 1: money in a bunch of ways. But that's obviously not 277 00:16:30,080 --> 00:16:33,280 Speaker 1: the case with robin Hood, which doesn't have you know, 278 00:16:33,320 --> 00:16:35,160 Speaker 1: which doesn't have nearly the asset base, that has a 279 00:16:35,280 --> 00:16:37,720 Speaker 1: very different business model, that doesn't have the bank attached 280 00:16:37,760 --> 00:16:39,960 Speaker 1: to it like Schwab does. It doesn't have all the 281 00:16:40,120 --> 00:16:44,040 Speaker 1: R I, A, S, etcetera. So just let's walk through 282 00:16:44,120 --> 00:16:49,160 Speaker 1: specifically the innovation on say the robin Hood side a 283 00:16:49,200 --> 00:16:53,360 Speaker 1: little bit further and how payment for order flow works there. 284 00:16:54,040 --> 00:16:56,840 Speaker 1: I opened up my robin Hood app. I make an 285 00:16:56,920 --> 00:17:01,880 Speaker 1: order to buy ten shares of Apple. Explain to me 286 00:17:01,960 --> 00:17:08,480 Speaker 1: specifically how robin hood makes money after that transaction without commissions. Well, 287 00:17:08,640 --> 00:17:10,960 Speaker 1: they make them their their money pretty much the same 288 00:17:10,960 --> 00:17:13,679 Speaker 1: way that swab are a merry trade or each trade 289 00:17:13,880 --> 00:17:16,240 Speaker 1: you know, doing that trade, get is going to get 290 00:17:16,320 --> 00:17:20,840 Speaker 1: routed to most likely Citadel, Virtue or Susquehanna through the 291 00:17:21,160 --> 00:17:23,359 Speaker 1: city har E tr And just just to stop you 292 00:17:23,480 --> 00:17:25,840 Speaker 1: real quickly when you those are the market makers when 293 00:17:25,880 --> 00:17:30,840 Speaker 1: you were talking about Okay, so these entities like Virtue, Citadel, 294 00:17:31,440 --> 00:17:34,879 Speaker 1: uh and so forth their market Suscohana their market makers, 295 00:17:35,520 --> 00:17:39,240 Speaker 1: their market makers. Yeah, and so they're going to route 296 00:17:39,280 --> 00:17:43,280 Speaker 1: that order flow to generally one of those three players. 297 00:17:43,480 --> 00:17:45,679 Speaker 1: They're the three largest, and there are a couple of 298 00:17:45,720 --> 00:17:50,240 Speaker 1: other auxiliary players there too, like six, like two sigma. 299 00:17:50,400 --> 00:17:53,200 Speaker 1: So they're gonna wrote that order flow to those guys. 300 00:17:53,560 --> 00:17:58,080 Speaker 1: The wholesalers are going to execute that equity order at 301 00:17:58,119 --> 00:18:00,440 Speaker 1: we're better than the best price in the mark because 302 00:18:00,480 --> 00:18:04,800 Speaker 1: that's how the SEC demands that those those orders get 303 00:18:04,800 --> 00:18:08,199 Speaker 1: executed and they're gonna pay. They're going to probably give 304 00:18:08,240 --> 00:18:11,280 Speaker 1: a little bit of price improvement to the order so 305 00:18:11,320 --> 00:18:13,959 Speaker 1: that you'll get a price that it's actually better than 306 00:18:14,000 --> 00:18:17,280 Speaker 1: what you see in the marketplace, and then they're going 307 00:18:17,359 --> 00:18:21,280 Speaker 1: to pay robin Hood a few cents for that order. 308 00:18:21,520 --> 00:18:24,400 Speaker 1: And it could be you know, it could be anywhere 309 00:18:24,520 --> 00:18:28,359 Speaker 1: from the average payment for order flow is about fourteen 310 00:18:28,400 --> 00:18:31,159 Speaker 1: cents per hundred shares, but actually in robin Hood it's 311 00:18:31,200 --> 00:18:34,600 Speaker 1: it's more. Yeah, I wanted to I wanted to ask 312 00:18:34,640 --> 00:18:37,520 Speaker 1: you about exactly this, and I think maybe it will 313 00:18:37,520 --> 00:18:40,159 Speaker 1: help us understand the process more. But one of the 314 00:18:40,240 --> 00:18:44,160 Speaker 1: criticisms of robin Hood especially is that it tends to 315 00:18:44,200 --> 00:18:49,400 Speaker 1: get more for every dollar in you know, customer order 316 00:18:49,520 --> 00:18:54,199 Speaker 1: flow versus someone like Schwab. Why is that? What's the 317 00:18:54,240 --> 00:18:58,080 Speaker 1: difference there, because presumably everyone is sort of executing at 318 00:18:58,119 --> 00:19:00,719 Speaker 1: at similar prices, or at least execut eoting with with 319 00:19:00,800 --> 00:19:06,439 Speaker 1: the same intent of achieving best price. Yeah, that that 320 00:19:06,480 --> 00:19:10,240 Speaker 1: gets a little square me. So, So if you think about, 321 00:19:10,440 --> 00:19:15,080 Speaker 1: you know, the three sections of profit, you know, the 322 00:19:15,119 --> 00:19:18,480 Speaker 1: price improvement, the payment for water flow, and the market 323 00:19:18,480 --> 00:19:21,480 Speaker 1: maker profit. So if you think about it, the spread 324 00:19:21,520 --> 00:19:23,280 Speaker 1: is going to be the same whether it's you know, 325 00:19:23,320 --> 00:19:25,920 Speaker 1: whether you know it's you or me, are coming from 326 00:19:25,920 --> 00:19:29,280 Speaker 1: Schwab or robin Hood or each free. So the bigger 327 00:19:29,400 --> 00:19:31,520 Speaker 1: question is how much am I going to make on 328 00:19:31,560 --> 00:19:34,280 Speaker 1: that trade? And how is that what I make going 329 00:19:34,320 --> 00:19:37,240 Speaker 1: to be split between what I keep, what I send 330 00:19:37,280 --> 00:19:39,200 Speaker 1: to the client and what I send to the broker 331 00:19:39,720 --> 00:19:42,760 Speaker 1: and what I what I keep will probably be somewhat 332 00:19:42,800 --> 00:19:47,679 Speaker 1: consistent because it's very competitive, and so the real differences 333 00:19:48,119 --> 00:19:50,919 Speaker 1: between what I what I give to the client and 334 00:19:51,000 --> 00:19:55,640 Speaker 1: what I give to to the broker. And and while 335 00:19:55,640 --> 00:19:59,640 Speaker 1: they don't have, um the execution quality stats, that's where 336 00:19:59,680 --> 00:20:02,960 Speaker 1: there could be different you know, um that robin Hood 337 00:20:02,960 --> 00:20:05,720 Speaker 1: may keep a larger percentage or a smaller percentage, or 338 00:20:05,760 --> 00:20:09,040 Speaker 1: give you a larger percentage back to the client or not. 339 00:20:09,560 --> 00:20:13,119 Speaker 1: And that's where there can be some variability. How do 340 00:20:13,160 --> 00:20:17,720 Speaker 1: you measure execution quality? Execution qualities usually measured by the 341 00:20:17,840 --> 00:20:20,399 Speaker 1: spread and the percentage of the spread that goes to 342 00:20:20,440 --> 00:20:23,160 Speaker 1: the market maker versus the percentage of spread that goes 343 00:20:23,200 --> 00:20:27,600 Speaker 1: to the client. And and we've seen those numbers actually 344 00:20:28,080 --> 00:20:32,520 Speaker 1: very significantly over the last twenty years from basically the 345 00:20:33,240 --> 00:20:38,280 Speaker 1: broker or the market maker keeping the full spread, the 346 00:20:38,320 --> 00:20:43,760 Speaker 1: only keeping roughly about of half the spread, actually keeping 347 00:20:43,760 --> 00:20:45,919 Speaker 1: half the spread because everything is measured on half to 348 00:20:45,960 --> 00:20:49,960 Speaker 1: spread between the midpoint and the execution price. So it's 349 00:20:50,000 --> 00:20:53,240 Speaker 1: gone over the last twenty years from the market maker 350 00:20:53,400 --> 00:20:57,879 Speaker 1: keeping basically the whole half spread versus they're only keeping 351 00:20:57,920 --> 00:21:02,200 Speaker 1: about half the spread. And so it's all measured between 352 00:21:02,200 --> 00:21:06,800 Speaker 1: the execution price and versus the displayed price. And it's 353 00:21:06,800 --> 00:21:11,600 Speaker 1: a measurement called e Q effective over quoted ratio and 354 00:21:11,680 --> 00:21:19,280 Speaker 1: that's part of the SEC's reporting requirements for retail execution. 355 00:21:19,880 --> 00:21:23,840 Speaker 1: So we're seeing, you know, we're seeing much better execution quality. Now. 356 00:21:23,920 --> 00:21:28,280 Speaker 1: That execution quality differs, you know, can differ really depending 357 00:21:28,359 --> 00:21:32,679 Speaker 1: upon what the broker's priority is. Do they want to 358 00:21:32,680 --> 00:21:34,920 Speaker 1: get paid or do they want to give that money 359 00:21:34,920 --> 00:21:36,480 Speaker 1: to the client. So you can look at let's just 360 00:21:36,560 --> 00:21:41,200 Speaker 1: say Fidelity. Fidelity doesn't take payment for water cloth from 361 00:21:41,760 --> 00:21:46,320 Speaker 1: retail clients. So all of that, all of that money 362 00:21:46,359 --> 00:21:51,040 Speaker 1: that comes back in effect from the wholesaler um goes 363 00:21:51,119 --> 00:21:55,479 Speaker 1: directly to the client. Whereas folks like Robin Hood probably 364 00:21:55,520 --> 00:21:57,879 Speaker 1: take a little bit more, Shub takes a little less, 365 00:21:58,080 --> 00:22:02,359 Speaker 1: but you know, it really is a dialog most depending 366 00:22:02,440 --> 00:22:06,080 Speaker 1: upon what what the pretail brooke will wants. So I 367 00:22:06,080 --> 00:22:09,040 Speaker 1: want to press you a little bit on best execution 368 00:22:09,280 --> 00:22:13,399 Speaker 1: and best price as well, because one of the criticisms 369 00:22:13,520 --> 00:22:16,520 Speaker 1: of commission free trading or payment for order flow is 370 00:22:16,600 --> 00:22:20,520 Speaker 1: that even though you're trading for free, you might not 371 00:22:20,640 --> 00:22:24,639 Speaker 1: necessarily be getting the best price. And that's you know, 372 00:22:25,280 --> 00:22:30,000 Speaker 1: even though you're dealing in smaller retail orders, um that 373 00:22:30,160 --> 00:22:33,679 Speaker 1: market makers can execute at tighter spread. So can you 374 00:22:34,280 --> 00:22:36,840 Speaker 1: can you sort of walk us through that argument? And 375 00:22:37,000 --> 00:22:41,440 Speaker 1: what is what is the opportunity that retail investors are 376 00:22:41,520 --> 00:22:46,680 Speaker 1: missing out on when their trade goes to a payment 377 00:22:46,760 --> 00:22:51,760 Speaker 1: for order flow provider versus a different system. You're you're 378 00:22:51,760 --> 00:22:54,840 Speaker 1: starting to get into a little complicated areas here, So 379 00:22:55,280 --> 00:22:57,320 Speaker 1: let's let's make it a little let's make it a 380 00:22:57,359 --> 00:23:01,000 Speaker 1: little simpler, and then we'll add some complexity to Generally 381 00:23:01,000 --> 00:23:04,359 Speaker 1: what happens is since the wholesaler receives the order and 382 00:23:04,440 --> 00:23:08,320 Speaker 1: executes it off exchange, they then can manage the risk 383 00:23:08,440 --> 00:23:12,240 Speaker 1: and execute it and executed at a tighter price than 384 00:23:12,920 --> 00:23:15,720 Speaker 1: you know what can happen on the exchange. So without 385 00:23:15,760 --> 00:23:19,320 Speaker 1: the without the whole, without the wholesaler. In effect, what 386 00:23:19,359 --> 00:23:21,560 Speaker 1: would happen is that order would go to an exchange 387 00:23:21,600 --> 00:23:25,200 Speaker 1: and that would trade on the bid or on the offer, okay, 388 00:23:25,359 --> 00:23:27,560 Speaker 1: or you know, if it traded in the dark, it 389 00:23:27,720 --> 00:23:31,240 Speaker 1: might be executed at a mid price, but by and large, 390 00:23:31,440 --> 00:23:33,359 Speaker 1: if it goes to an exchange, it's going to be 391 00:23:33,440 --> 00:23:36,399 Speaker 1: traded at the bid or the offer. The whole saler 392 00:23:36,480 --> 00:23:39,600 Speaker 1: is going to give you uh an inside price, a 393 00:23:39,680 --> 00:23:42,320 Speaker 1: price that's better than the bid of the offer. So 394 00:23:42,880 --> 00:23:46,159 Speaker 1: the whole idea that that the wholesaler is kind of 395 00:23:46,240 --> 00:23:49,439 Speaker 1: ripping you off. That doesn't really fly, especially when you 396 00:23:49,480 --> 00:23:53,159 Speaker 1: start seeing prices that are tighter than the best bid offer, 397 00:23:53,720 --> 00:23:56,200 Speaker 1: because you wouldn't necessarily get that. If you routed to 398 00:23:56,320 --> 00:23:59,840 Speaker 1: an exchange, you would generally get the bitter offer. Now, 399 00:24:00,880 --> 00:24:04,280 Speaker 1: adding a little bit of complexity to this is that 400 00:24:04,400 --> 00:24:09,320 Speaker 1: in most cases, odd lot orders are not displayed, and 401 00:24:09,320 --> 00:24:14,080 Speaker 1: and that's part of the new SEC Market Data Infrastructure proposal. 402 00:24:14,160 --> 00:24:17,199 Speaker 1: If they want to start seeing more odd lots, be 403 00:24:17,480 --> 00:24:20,120 Speaker 1: part of the bit of the offer. So there may 404 00:24:20,160 --> 00:24:24,920 Speaker 1: be odd lots sitting more aggressively in the market. Then 405 00:24:25,040 --> 00:24:27,560 Speaker 1: then you actually see when you get on your robin 406 00:24:27,560 --> 00:24:31,920 Speaker 1: Hood screen or your schwob screen, and so they're actually 407 00:24:32,000 --> 00:24:35,600 Speaker 1: may be more aggressively priced orders out there that you 408 00:24:35,680 --> 00:24:39,640 Speaker 1: can't see. But hopefully under the new UM proposal, if 409 00:24:39,640 --> 00:24:43,320 Speaker 1: that ever goes through UM, you know you'll see a 410 00:24:43,359 --> 00:24:47,159 Speaker 1: tighter price and a little different So I wish I 411 00:24:47,160 --> 00:24:49,720 Speaker 1: could say that you were always when you've got price improvement, 412 00:24:49,720 --> 00:24:53,439 Speaker 1: you are always getting UM the most aggressive price that 413 00:24:53,520 --> 00:24:56,280 Speaker 1: you can get into an exchange. But that may not 414 00:24:56,400 --> 00:25:00,960 Speaker 1: necessarily be true, depending upon the numbers share you're executing 415 00:25:01,000 --> 00:25:04,479 Speaker 1: and what you actually can't see that's more aggressively priced 416 00:25:04,560 --> 00:25:10,480 Speaker 1: because of the way that consolidated Tabeork. So I'm curious. 417 00:25:10,480 --> 00:25:15,320 Speaker 1: So obviously, payment for order flow is UM available and 418 00:25:15,359 --> 00:25:17,760 Speaker 1: widely used in the United States, but over in the 419 00:25:17,880 --> 00:25:21,960 Speaker 1: UK the Financial Services Authority cracked down on it many 420 00:25:22,000 --> 00:25:24,119 Speaker 1: many years ago. I think it was they banned it 421 00:25:24,160 --> 00:25:26,440 Speaker 1: in Europe, Yeah, I think it was two thousand twelve. 422 00:25:26,560 --> 00:25:30,160 Speaker 1: So what is it that they're seeing? What's their concern 423 00:25:30,240 --> 00:25:34,200 Speaker 1: with it that, you know, the US isn't necessarily seeing. Well. 424 00:25:34,320 --> 00:25:37,399 Speaker 1: First of all, retail trading in Europe tends to trading 425 00:25:37,440 --> 00:25:39,840 Speaker 1: in Europe tends to be not as retail focused. A 426 00:25:39,880 --> 00:25:42,920 Speaker 1: lot of the equity trading and shares trading in Europe, 427 00:25:43,359 --> 00:25:46,359 Speaker 1: it was really done by more institutions, so that's that's 428 00:25:46,400 --> 00:25:50,760 Speaker 1: one thing. Share trading in Europe in the UK by 429 00:25:50,840 --> 00:25:54,760 Speaker 1: retail tends to be more around spread betting, which is 430 00:25:54,760 --> 00:25:59,320 Speaker 1: illegal here, so so there are different types of retail 431 00:25:59,560 --> 00:26:03,560 Speaker 1: brands actions that occur. The priority in the US has 432 00:26:03,640 --> 00:26:06,480 Speaker 1: really been to get the retail investor the best price, 433 00:26:07,359 --> 00:26:11,680 Speaker 1: and the SEC has structured those rules to really focus 434 00:26:11,760 --> 00:26:17,520 Speaker 1: more on price then price transparency within the exchanges. Europe 435 00:26:17,600 --> 00:26:20,680 Speaker 1: has been a little bit more focused on the whole 436 00:26:20,720 --> 00:26:24,199 Speaker 1: idea that we're community and the exchanges are really the 437 00:26:24,240 --> 00:26:28,520 Speaker 1: central point of price formation, and that that we want 438 00:26:28,600 --> 00:26:32,120 Speaker 1: a larger proportion of orders and trades to go through 439 00:26:32,160 --> 00:26:36,080 Speaker 1: the exchange infrastructure now and that was a part of 440 00:26:36,080 --> 00:26:40,520 Speaker 1: what the MIFED to the Market and Financial Instruments Directive. 441 00:26:41,400 --> 00:26:45,879 Speaker 1: Their second cut at that tried to do with with 442 00:26:46,000 --> 00:26:48,560 Speaker 1: reducing the amount of flow that could be traded in 443 00:26:48,720 --> 00:26:52,400 Speaker 1: dark pools and things like that. They were not successful there, 444 00:26:52,400 --> 00:26:57,200 Speaker 1: so they'll probably be a MIFED three, but they try 445 00:26:57,240 --> 00:27:00,400 Speaker 1: to push order flow into the exchanges. The US really 446 00:27:00,440 --> 00:27:06,440 Speaker 1: cares more about the price that investors get then UM 447 00:27:06,440 --> 00:27:25,320 Speaker 1: basically ensuring that the orders trade on exchange M. Can 448 00:27:25,359 --> 00:27:30,600 Speaker 1: you explain a little bit further. You mentioned that, Uh, Fidelity, 449 00:27:30,960 --> 00:27:33,440 Speaker 1: I think you said, didn't do payment for order flow, 450 00:27:34,040 --> 00:27:39,080 Speaker 1: which broker? Yeah? For equities? Which ones uh do and don't? 451 00:27:39,119 --> 00:27:44,440 Speaker 1: And what is the alternative model? Why not engaging it? Well, 452 00:27:44,480 --> 00:27:48,919 Speaker 1: first of all, Fidelity has the large mutual fun complex FUM. 453 00:27:48,960 --> 00:27:52,480 Speaker 1: I don't know for sure, but you can assume that 454 00:27:53,200 --> 00:27:55,880 Speaker 1: fidelities you want payment for order club. If you think 455 00:27:55,920 --> 00:27:59,600 Speaker 1: about it, if the retail orders did not go to 456 00:27:59,760 --> 00:28:02,720 Speaker 1: the sellers, they would come into the market and overall 457 00:28:02,760 --> 00:28:06,320 Speaker 1: they would be accessible to the institutions to trade against. 458 00:28:06,520 --> 00:28:09,720 Speaker 1: So so if you look at Fidelity over over, you 459 00:28:09,720 --> 00:28:12,760 Speaker 1: know its entirety, they want access to that order float 460 00:28:12,920 --> 00:28:16,320 Speaker 1: into their mutual funds, which they're really not getting. The 461 00:28:16,359 --> 00:28:20,320 Speaker 1: contra argument to that is that you know Fidelity, and 462 00:28:20,800 --> 00:28:23,280 Speaker 1: I'm not just picking up Fidelity, but you know every 463 00:28:23,320 --> 00:28:26,959 Speaker 1: mutual fund or every institutional trader, they hire traders, professional 464 00:28:27,000 --> 00:28:32,160 Speaker 1: traders who use algorithms to study um you know, execution quality, 465 00:28:32,200 --> 00:28:34,960 Speaker 1: who really focused on how they execute their waterflow, and 466 00:28:34,960 --> 00:28:36,440 Speaker 1: that's what they get paid for. That's what you can 467 00:28:36,440 --> 00:28:40,600 Speaker 1: pay your fees to cover UM, but who represents your 468 00:28:40,680 --> 00:28:43,520 Speaker 1: order at Schwab, who represents your order you know, at 469 00:28:43,520 --> 00:28:47,040 Speaker 1: each trade you can argue that that is the wholesale 470 00:28:47,040 --> 00:28:50,280 Speaker 1: of the wholesaler you know, gives you that best price 471 00:28:50,400 --> 00:28:53,320 Speaker 1: in effect, because they are the guy that's guaranteeing that 472 00:28:53,480 --> 00:28:58,280 Speaker 1: best execution. And SWAB and those guys, they don't have 473 00:28:58,400 --> 00:29:02,240 Speaker 1: those teams of traders studying every fill, every order UM 474 00:29:02,240 --> 00:29:06,200 Speaker 1: and every nuance of transaction. So it's a it's a 475 00:29:06,200 --> 00:29:09,040 Speaker 1: difference of philosophy that it's it's really it'd be great 476 00:29:09,080 --> 00:29:11,520 Speaker 1: to say the payment for order flow is good or 477 00:29:11,600 --> 00:29:15,440 Speaker 1: bad or this to that it's very nuanced and it's 478 00:29:15,840 --> 00:29:18,400 Speaker 1: general life fall on that it's been. It's it's a 479 00:29:18,440 --> 00:29:22,160 Speaker 1: good thing. We'll put it this way. The whole sailing process. 480 00:29:22,160 --> 00:29:26,040 Speaker 1: Whether the firm like Fidelity gives all that money back 481 00:29:26,080 --> 00:29:28,200 Speaker 1: to the client, I think that's a great thing. UM. 482 00:29:28,280 --> 00:29:32,240 Speaker 1: I would much rather see um price improvement go to 483 00:29:32,320 --> 00:29:36,280 Speaker 1: the client rather than the brokerags take a portion of it. 484 00:29:36,360 --> 00:29:38,800 Speaker 1: But on the other hand, you know that payment for 485 00:29:38,880 --> 00:29:41,920 Speaker 1: water flow along with securities lending, which is the other 486 00:29:41,960 --> 00:29:45,480 Speaker 1: way that these guys make money. You know that that's 487 00:29:45,760 --> 00:29:49,080 Speaker 1: you know what funds the ability to have pre commissions, 488 00:29:49,160 --> 00:29:52,040 Speaker 1: so it's not like they're going to town on your 489 00:29:52,160 --> 00:29:55,840 Speaker 1: order flow. It's a very competitive market and generally execution 490 00:29:55,960 --> 00:29:58,320 Speaker 1: quality has just been getting better and better, so it's 491 00:29:58,360 --> 00:30:01,280 Speaker 1: really this whole pros This has actually been good for 492 00:30:01,600 --> 00:30:06,840 Speaker 1: individual investors um so. In addition to the big boom 493 00:30:06,920 --> 00:30:10,040 Speaker 1: in retail trading, one of the recent trends that we've 494 00:30:10,080 --> 00:30:13,320 Speaker 1: seen is all the banks reporting their results and a 495 00:30:13,400 --> 00:30:17,360 Speaker 1: lot of them posting better than expected trading results. You 496 00:30:17,400 --> 00:30:21,760 Speaker 1: mentioned internalization towards the beginning of our conversation. Could you 497 00:30:21,840 --> 00:30:26,560 Speaker 1: maybe give us an overview of what internalization actually means 498 00:30:26,640 --> 00:30:31,680 Speaker 1: at banks and how it it might be I guess 499 00:30:31,720 --> 00:30:34,400 Speaker 1: how the business might be doing at the moment given 500 00:30:34,440 --> 00:30:38,240 Speaker 1: that retail trading boom. There's been actually major shifts in 501 00:30:38,360 --> 00:30:42,920 Speaker 1: terms of food trades and why if you look at 502 00:30:43,440 --> 00:30:46,680 Speaker 1: our food trades and who profits. If you look at 503 00:30:47,160 --> 00:30:51,800 Speaker 1: market share of you know, the over the counter business, 504 00:30:52,440 --> 00:30:57,040 Speaker 1: it has shifted really dramatically to you know, to the wholesalers. 505 00:30:57,560 --> 00:31:03,400 Speaker 1: Citadel Is trading like you know alone of all the 506 00:31:03,480 --> 00:31:06,600 Speaker 1: overcount over the counter trades, and they have gained share 507 00:31:06,680 --> 00:31:12,600 Speaker 1: over the last couple of months. Virtue um is less 508 00:31:12,600 --> 00:31:15,560 Speaker 1: than them. I think they're in the you know or 509 00:31:15,560 --> 00:31:19,760 Speaker 1: something range. And so you're seeing a tremendous shift of 510 00:31:19,920 --> 00:31:23,880 Speaker 1: word flow to these wholesalers. The folks who are actually 511 00:31:23,920 --> 00:31:27,800 Speaker 1: losing ground are, you know, the traditional brokers, the government's access, 512 00:31:27,840 --> 00:31:31,600 Speaker 1: the Morgan Stanley's, the city groups, the Bank of American 513 00:31:31,640 --> 00:31:34,880 Speaker 1: merrell Inches. They are losing, they have been losing ground 514 00:31:34,880 --> 00:31:38,640 Speaker 1: in terms of equities, and and that's because a certain extent, 515 00:31:38,680 --> 00:31:41,200 Speaker 1: it's very difficult for them to keep up with the 516 00:31:41,560 --> 00:31:47,400 Speaker 1: technological race, the technology race, you know, compared to the Citadels, 517 00:31:47,440 --> 00:31:52,800 Speaker 1: the virtues, the two stigmas, the Susquehannas, Because to certain 518 00:31:52,840 --> 00:31:55,479 Speaker 1: extent you think about it, it's all about agility. If 519 00:31:55,520 --> 00:31:58,600 Speaker 1: I can find a faster way, a faster server, a 520 00:31:58,640 --> 00:32:01,720 Speaker 1: better way to calculate this stuff. If there were fewer 521 00:32:02,040 --> 00:32:06,600 Speaker 1: levels of bureaucracy and technology layers between me and the 522 00:32:06,640 --> 00:32:10,479 Speaker 1: ability to get you know, changed, I can adapt quicker 523 00:32:10,560 --> 00:32:13,280 Speaker 1: and I can be more competitive. And if you look 524 00:32:13,320 --> 00:32:16,040 Speaker 1: at the big banks, they've gotten so big and so 525 00:32:16,160 --> 00:32:20,000 Speaker 1: large and and so so massive. So if so, if 526 00:32:20,040 --> 00:32:23,920 Speaker 1: I'm in the equity trading side of big bank, a um, 527 00:32:23,960 --> 00:32:28,320 Speaker 1: I'm competing for resources, not just with the fixed income side, 528 00:32:28,360 --> 00:32:31,080 Speaker 1: and not just with the institutional side, but I'm competing 529 00:32:31,120 --> 00:32:35,960 Speaker 1: for resources with retail banking, credit cards, mortgages, you know, 530 00:32:36,000 --> 00:32:40,840 Speaker 1: wealth management, all sorts of different players. And so whereas 531 00:32:40,840 --> 00:32:45,680 Speaker 1: if I am Citadel or Virture or Susquehanna, I just 532 00:32:45,720 --> 00:32:47,760 Speaker 1: need to go across the floor and say, hey, body, 533 00:32:47,760 --> 00:32:49,640 Speaker 1: I need I need a new server, you know, right, 534 00:32:49,680 --> 00:32:52,840 Speaker 1: and you check, you see, and you've seen that play 535 00:32:52,880 --> 00:32:55,560 Speaker 1: out as well as the regulatory infrastructure has not been 536 00:32:55,640 --> 00:32:58,440 Speaker 1: particularly favorable over the last decade. That's the big banks 537 00:32:58,440 --> 00:33:01,440 Speaker 1: in terms of taking risks. Now, on the other hand, 538 00:33:01,800 --> 00:33:04,200 Speaker 1: you know, you look at the fixed income side, and 539 00:33:04,400 --> 00:33:06,880 Speaker 1: you look at the earnings that the big banks have 540 00:33:07,000 --> 00:33:10,640 Speaker 1: turned out on the fixed income side, you're probably looking 541 00:33:10,720 --> 00:33:15,160 Speaker 1: at this quarter alone then making something like twenty to 542 00:33:15,280 --> 00:33:19,240 Speaker 1: thirty billion dollars on their trading business. Now that twenty 543 00:33:19,240 --> 00:33:22,760 Speaker 1: to thirty billion dollars is coming out of investors pockets, 544 00:33:23,040 --> 00:33:24,760 Speaker 1: they are not making that kind of money on the 545 00:33:24,800 --> 00:33:27,360 Speaker 1: equity side. And that has a lot to do with 546 00:33:27,400 --> 00:33:30,240 Speaker 1: the market structure and the efficiency and the way that 547 00:33:30,320 --> 00:33:34,320 Speaker 1: these orders are internalized in how they trade, and so 548 00:33:34,440 --> 00:33:36,360 Speaker 1: over the time I think you're going to see the 549 00:33:36,440 --> 00:33:39,800 Speaker 1: fixed income side become more efficient, probably will never be 550 00:33:39,880 --> 00:33:43,360 Speaker 1: as efficient as the equity side, mostly because there's if 551 00:33:43,400 --> 00:33:46,120 Speaker 1: it depending on if you include mortgages over a million 552 00:33:46,560 --> 00:33:49,760 Speaker 1: queues of some million individual securities that need to be priced, 553 00:33:49,840 --> 00:33:53,600 Speaker 1: but it's going to become more efficient and cheaper. Do 554 00:33:53,640 --> 00:33:59,200 Speaker 1: you see these entities like Susquehanna and Citadel continuing to 555 00:33:59,680 --> 00:34:03,440 Speaker 1: ex spanned their lines of businesses and just continue you know, 556 00:34:03,680 --> 00:34:06,040 Speaker 1: I don't know if cannibalization isn't the right word, but 557 00:34:06,400 --> 00:34:09,960 Speaker 1: find more areas where they can win market share against 558 00:34:09,960 --> 00:34:14,879 Speaker 1: these legacy players, no question, no question. And so uh, 559 00:34:14,920 --> 00:34:17,200 Speaker 1: you know, if you look at the you know, the 560 00:34:17,239 --> 00:34:20,960 Speaker 1: markets that look closest to equities tend to be much 561 00:34:21,000 --> 00:34:25,360 Speaker 1: more easily able to be you know, aligned to electronic 562 00:34:25,400 --> 00:34:31,160 Speaker 1: trading type type strategies. So certainly options have gone that way. 563 00:34:31,600 --> 00:34:34,520 Speaker 1: If you look at an exchange, it's it's starting to 564 00:34:34,560 --> 00:34:37,160 Speaker 1: move in that direction. Some of the fixed income is 565 00:34:37,160 --> 00:34:38,799 Speaker 1: starting to move in that direction. And it may not 566 00:34:38,840 --> 00:34:42,920 Speaker 1: necessarily be the same players. Some folks have different you know, 567 00:34:43,200 --> 00:34:46,319 Speaker 1: there are other players that focus in other markets, but 568 00:34:46,400 --> 00:34:50,600 Speaker 1: the electronic guys are just they have lower overhead unless 569 00:34:50,800 --> 00:34:56,680 Speaker 1: regulatory burdens. So it's a combination of agility focus and 570 00:34:56,880 --> 00:35:02,440 Speaker 1: regulatory headwinds. And the banks over the last decade have 571 00:35:02,880 --> 00:35:07,160 Speaker 1: certainly had tremendous amounts of regulatory headwinds in the size 572 00:35:07,160 --> 00:35:09,480 Speaker 1: of the business. Before we go, I want to just 573 00:35:09,520 --> 00:35:12,840 Speaker 1: go back to the robin Hood phenomenon. So you know, 574 00:35:12,920 --> 00:35:17,520 Speaker 1: people hear this stuff like Citadel is paying for order flow, 575 00:35:18,120 --> 00:35:20,680 Speaker 1: and they don't really understand what that means, and they're like, oh, 576 00:35:20,920 --> 00:35:24,000 Speaker 1: you're you're being a front run, and that's really what's happening, 577 00:35:24,239 --> 00:35:26,359 Speaker 1: And as you described, that's really not and in fact, 578 00:35:26,480 --> 00:35:30,480 Speaker 1: actually pricing is pretty good and it just keeps getting 579 00:35:30,480 --> 00:35:35,360 Speaker 1: better and better, and so forth, should be sec or 580 00:35:35,400 --> 00:35:39,840 Speaker 1: regulators be more concerned about the gamification aspect. Of the 581 00:35:39,840 --> 00:35:44,200 Speaker 1: gamification aspect, the idea that, uh, you know, these entities 582 00:35:44,239 --> 00:35:47,719 Speaker 1: are sort of turning trading into a video game, and 583 00:35:48,160 --> 00:35:50,400 Speaker 1: not so much whether people are getting bad prices are 584 00:35:50,400 --> 00:35:52,839 Speaker 1: being front run, but whether this is just sort of 585 00:35:52,880 --> 00:35:57,239 Speaker 1: like a risky, reckless way to introduced investors to the 586 00:35:57,280 --> 00:36:02,520 Speaker 1: stock market. Now, now your ring on politics, um, you know, 587 00:36:03,360 --> 00:36:06,400 Speaker 1: without oppinting on politics, but is this more the is 588 00:36:06,480 --> 00:36:09,560 Speaker 1: this more the issue when people are like, something feels 589 00:36:09,560 --> 00:36:11,520 Speaker 1: a little bit wrong about this, or I'm a little 590 00:36:11,600 --> 00:36:15,399 Speaker 1: uncomfortable with this whole robin Hood thing. Is it more 591 00:36:15,560 --> 00:36:20,719 Speaker 1: that side than the sort of more conspiratorial citadel stuff 592 00:36:20,760 --> 00:36:23,920 Speaker 1: stuff like that? There there are there are significant issues 593 00:36:24,000 --> 00:36:27,160 Speaker 1: there because if if now you can compare this pulls 594 00:36:27,360 --> 00:36:30,319 Speaker 1: to the dot com crisis, when you started to see investors, 595 00:36:30,400 --> 00:36:33,080 Speaker 1: you know, piling the pets dot com and things like that. 596 00:36:33,800 --> 00:36:36,439 Speaker 1: This is different. Back then, it was really more about 597 00:36:36,480 --> 00:36:38,759 Speaker 1: I p O s and buying and holding, and you 598 00:36:38,840 --> 00:36:42,080 Speaker 1: wound up, you know, with kind of plaky companies being 599 00:36:42,160 --> 00:36:46,000 Speaker 1: valued and wait too much and and people holding um 600 00:36:46,120 --> 00:36:48,479 Speaker 1: all these overvalued assets and then all of a sudden 601 00:36:48,480 --> 00:36:50,920 Speaker 1: the rug being pulled out. This seems to be a 602 00:36:50,960 --> 00:36:54,160 Speaker 1: bit different and that this is more about trading. And 603 00:36:54,200 --> 00:36:56,600 Speaker 1: I think one of the big things about robin Hood 604 00:36:56,680 --> 00:36:59,719 Speaker 1: is the transparency of their platform enables you to kind 605 00:36:59,719 --> 00:37:02,840 Speaker 1: of see what other people are trading and joined the 606 00:37:02,880 --> 00:37:07,440 Speaker 1: momentum train. And the problem with that is that that 607 00:37:07,600 --> 00:37:12,120 Speaker 1: you know, because you're dealing with a handheld device, do 608 00:37:12,160 --> 00:37:15,480 Speaker 1: you have enough information to really understand if if you're 609 00:37:15,480 --> 00:37:19,040 Speaker 1: in the beginning stages of this momentum train or if 610 00:37:19,040 --> 00:37:21,520 Speaker 1: you're in the middle, or if you're really you know, 611 00:37:21,840 --> 00:37:25,200 Speaker 1: buying at the peak. The benefit is that are they 612 00:37:25,239 --> 00:37:28,160 Speaker 1: really investing a lot in each of these trades and 613 00:37:28,680 --> 00:37:30,960 Speaker 1: are they how long are they sticking in with it? 614 00:37:31,000 --> 00:37:33,920 Speaker 1: But there are certainly evaluation questions. But on the other hand, 615 00:37:33,920 --> 00:37:39,080 Speaker 1: of the SEC doesn't look at itself because I'm trying 616 00:37:39,120 --> 00:37:43,840 Speaker 1: to say, yes, we should allow you know, Larry or 617 00:37:44,000 --> 00:37:48,680 Speaker 1: Joe or Tracy to buy Tesla whatever. They want to 618 00:37:48,719 --> 00:37:51,680 Speaker 1: make sure that you know, when you buy a Tesla 619 00:37:51,719 --> 00:37:55,640 Speaker 1: at whatever, is whatever the right price um and and 620 00:37:55,800 --> 00:37:58,919 Speaker 1: it is there transparency around that. And so I don't 621 00:37:58,920 --> 00:38:03,200 Speaker 1: see the SEC sticking their nose and the valuation issues 622 00:38:03,920 --> 00:38:06,480 Speaker 1: that said people should be worried about the you know, 623 00:38:06,520 --> 00:38:08,720 Speaker 1: the value of what they're buying because it's an effective 624 00:38:08,719 --> 00:38:11,520 Speaker 1: that they're not really worried about it. Then you know, 625 00:38:11,719 --> 00:38:15,839 Speaker 1: you're into the strategy of who's the next sucker who 626 00:38:15,880 --> 00:38:17,680 Speaker 1: is going to buy this for me at a higher price? 627 00:38:17,760 --> 00:38:24,600 Speaker 1: And I'm not sure that's great investing strategy right Well, uh, Larry, 628 00:38:24,640 --> 00:38:27,759 Speaker 1: this is a great conversation. This cleared up a lot 629 00:38:27,840 --> 00:38:31,279 Speaker 1: of questions that I've had for a while and sort 630 00:38:31,320 --> 00:38:33,640 Speaker 1: of I think for me and Tracy gives us a 631 00:38:33,680 --> 00:38:37,320 Speaker 1: lot of new avenues to explore. So I really appreciate 632 00:38:37,360 --> 00:38:39,839 Speaker 1: you coming on and explaining it. I hope to play 633 00:38:39,880 --> 00:38:42,840 Speaker 1: didn't confuse everybody too much, but it's it's not that. 634 00:38:43,040 --> 00:38:45,560 Speaker 1: That's see, that's why we need market structure research because 635 00:38:45,600 --> 00:38:49,320 Speaker 1: it is complicated. Thanks so much. It feels like we 636 00:38:49,480 --> 00:38:52,080 Speaker 1: just scratched the service, but this was it was really great. 637 00:38:52,120 --> 00:39:01,000 Speaker 1: Thank you, Thank you. Yeah. I have to admit tracing 638 00:39:01,040 --> 00:39:03,799 Speaker 1: this area it does sort of hurt my head a lot, 639 00:39:03,880 --> 00:39:05,880 Speaker 1: and I do have like a million more things I 640 00:39:05,920 --> 00:39:09,040 Speaker 1: want to explore now. But that was a really helpful 641 00:39:09,160 --> 00:39:11,960 Speaker 1: sort of overview of what is it kind of extraordinary 642 00:39:12,000 --> 00:39:15,520 Speaker 1: moment in financial markets. Yeah, I mean I've read I've 643 00:39:15,560 --> 00:39:20,040 Speaker 1: read the criticism, and I've read some of Larry's research 644 00:39:20,120 --> 00:39:22,880 Speaker 1: which kind of argues that payment for order flow isn't 645 00:39:22,960 --> 00:39:26,279 Speaker 1: as nefarious as it seems. And it's very hard for me, 646 00:39:26,400 --> 00:39:28,839 Speaker 1: as a non expert to con you know, to come 647 00:39:28,840 --> 00:39:32,040 Speaker 1: out on either side of that. But what I did 648 00:39:32,080 --> 00:39:34,520 Speaker 1: find very interesting and something that I think we can 649 00:39:34,560 --> 00:39:38,080 Speaker 1: all agree with was Larry's point about this idea of 650 00:39:38,880 --> 00:39:42,840 Speaker 1: commission free trading sort of turning the market into a 651 00:39:42,960 --> 00:39:47,680 Speaker 1: very momentum driven one. You know, people aren't necessarily holding 652 00:39:47,680 --> 00:39:50,240 Speaker 1: for the long term because it doesn't cost them anything 653 00:39:50,280 --> 00:39:54,040 Speaker 1: to make these trades, and so everything does really become 654 00:39:54,080 --> 00:39:58,239 Speaker 1: about momentum or flows, you know, just guessing where the 655 00:39:58,280 --> 00:40:01,440 Speaker 1: money is going to go in in next and one 656 00:40:01,480 --> 00:40:03,719 Speaker 1: of our Bloomberg colleagues, Luke Kaw, did a really good 657 00:40:03,719 --> 00:40:06,560 Speaker 1: story on robin Hood and this dynamic recently, and it 658 00:40:06,640 --> 00:40:10,960 Speaker 1: was sort of around people kind of agreeing what stocks 659 00:40:11,040 --> 00:40:14,760 Speaker 1: to buy and then pushing for them in online forums 660 00:40:14,800 --> 00:40:16,439 Speaker 1: and then the stock would go up and they would 661 00:40:16,480 --> 00:40:18,440 Speaker 1: make a lot of money on robin Hood through options 662 00:40:18,440 --> 00:40:22,160 Speaker 1: trading and things like that. Anyway, That's that's the dynamic 663 00:40:22,239 --> 00:40:24,719 Speaker 1: that that I think is very new and important for 664 00:40:24,800 --> 00:40:29,919 Speaker 1: markets overall. Yeah, tell the right. I also like, um, 665 00:40:30,120 --> 00:40:31,839 Speaker 1: we should have Chris White on again soon. I mean, 666 00:40:31,880 --> 00:40:33,719 Speaker 1: I know we've had them on like nine times, but 667 00:40:33,920 --> 00:40:37,440 Speaker 1: thinking about again revisiting this topic in light of just 668 00:40:37,480 --> 00:40:41,640 Speaker 1: this massive quarter that the Wall Street banks had trading 669 00:40:41,960 --> 00:40:45,640 Speaker 1: UH fixed income, we should definitely have them back on 670 00:40:45,880 --> 00:40:50,080 Speaker 1: talking about market structure on that side too, because obviously 671 00:40:50,120 --> 00:40:52,600 Speaker 1: there's a huge pot of gold there for anyone who 672 00:40:52,760 --> 00:40:55,200 Speaker 1: is in a good position to, uh, you know, continue 673 00:40:55,239 --> 00:40:58,239 Speaker 1: to disrupt that space like they've done with the equities. Hey, 674 00:40:58,320 --> 00:41:01,600 Speaker 1: I am always up for a market's ructure episode. Great, 675 00:41:01,719 --> 00:41:05,279 Speaker 1: well let's do more. So do we leave it there? Yeah? 676 00:41:05,320 --> 00:41:08,480 Speaker 1: You know what I forgot to ask Larry. I wonder like, 677 00:41:08,760 --> 00:41:12,000 Speaker 1: will we ever break the zero lower bound with brokerages? Like? 678 00:41:12,040 --> 00:41:15,320 Speaker 1: Can I get someone will pay us? Yeah? Yeah, maybe 679 00:41:15,400 --> 00:41:18,479 Speaker 1: that's the Maybe that's the next frontier. That'd be fun. 680 00:41:18,560 --> 00:41:21,080 Speaker 1: You could you know, maybe make more money than you 681 00:41:21,080 --> 00:41:25,200 Speaker 1: could on on interest rates by doing that? Yeah? Okay, 682 00:41:25,239 --> 00:41:28,360 Speaker 1: I I meant to ask that, but next time, Okay, 683 00:41:28,440 --> 00:41:32,200 Speaker 1: next time. All right, Well, this has been another episode 684 00:41:32,239 --> 00:41:34,799 Speaker 1: of the All Thoughts Podcast. I'm Tracy Alloway. You can 685 00:41:34,840 --> 00:41:38,000 Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe 686 00:41:38,000 --> 00:41:40,640 Speaker 1: Why Isn't All? You could follow me on Twitter at 687 00:41:40,680 --> 00:41:43,480 Speaker 1: the Stalwart, And you should follow our guests on Twitter 688 00:41:43,560 --> 00:41:47,000 Speaker 1: Larry tab He's at el Tab with two Bees. Follow 689 00:41:47,040 --> 00:41:50,160 Speaker 1: our producer on Twitter, Laura Carlson at Laura M. Carlson. 690 00:41:50,320 --> 00:41:54,640 Speaker 1: Follow the Bloomberg head of podcast, Francesca Leave at Francesca Today, 691 00:41:54,800 --> 00:41:57,400 Speaker 1: and check out all of our podcasts under the handle 692 00:41:57,840 --> 00:42:13,520 Speaker 1: at podcast. Thanks for listening to