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Is the Payment for Order Flow Stream Drying Up?Nasdaq Dealer Says Rebates Have Been Halved on Ove

Traders Magazine, December 1997

Michael L. O'Reilly

Payment for order flow on Nasdaq business could soon be facing extinction. The profit on each Nasdaq trade, which once enabled a market maker to pay an order-entry firm around two cents a share for order flow, has shrunk threatening the rebates vital to some discount brokers.

"Payments have been cut about 50 percent across the full range of orders," said Leonard Mayer, president of New York-based Mayer & Schweitzer, a Charles Schwab Corporation affiliate and leading Nasdaq market maker.

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