US stock brokers made $3.8 billion selling customer orders amid the meme-stock craze, with Charles Schwab edging out Robinhood with the most PFOF gains

Last year's windfall from payment for order flow was a 33% gain from the year prior, Bloomberg Intelligence data shows.

• The top 12 US brokerages made $3.8 billion from payment for order flow last year, new data show.
• Charles Schwab made the most from selling customer orders with Robinhood coming in second.
• Citadel Securities, the market-maker run by Ken Griffin, was the biggest payer, the data showed.
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US brokers reaped billions of dollars selling customer orders amid the meme-stock craze a year ago, new data show. 

According to Bloomberg Intelligence data reported on by the Wall Street Journal, the top 12 brokers made a combined $3.8 billion in 2021 from payment for order flow, with much of that payment coming from Citadel Securities, the market-maker run by Ken Griffin.

Last year's windfall — stoked by the army of retail traders who drove massive gains in companies like GameStop and AMC — was a 33% gain from the year prior, the data show.

The broker that collected the most from selling customer orders was Charles Schwab, which received $1.7 billion from its brokerage units TD Ameritrade and Schwab, the Journal said. Robinhood, the retail-trading app at the center of meme-stock mania, came in a distant second, collecting $974 million.

Payment for order flow is the practice by which market makers, like Citadel Securities, execute trades for retail investors and collect on the difference between the bid and ask price, some of which is paid to brokers like Charles Schwab and Robinhood. 

The practice essentially allows retail investors to trade free of charge. It came under scrutiny last year by regulators and even retail traders who said payment for order flow comes with an inherent conflict of interest and keeps individual investors from getting the best price execution.

Citadel Securities, the data showed, was the biggest payer last year in the payment-for-order-flow model, doling out $1.5 billion to the 12 brokers. 

Robinhood and Citadel Securities were at the center of retail traders' fury last year after the trading app halted buying of meme stocks like GameStop, causing the prices to plummet. Retail investors claimed the two had conspired against them, while Citadel Securities dismissed the claim as a conspiracy theory.

The US Securities and Exchange Commission has weighed a ban on payment for order flow since the meme-stock frenzy last year.