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Price Improvement Belongs to Dealers, Professor Says

Traders Magazine, December 2002

John A. Byrne

The most important information in order routing arrrangements may be overlooked by investors, according to a Harvard University academic. Frequently warned by regulators about the hidden costs in payment for order flow arrangements, it could pay investors to start placing a higher premium on the "price improvement" opportunities a broker is receiving, he says. That's because these order flow payments, which are disclosed under Rule 11Ac1-6, can mislead investors and sow confusion.

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