The practice of brokerage firms charging trading venues for order flow has reached record levels in the U.S. securities markets — and is highly concentrated among the brokers that rely on these revenues and the firms that execute the trades — according to a new report from Moody’s Ratings.
Based on its analysis of the regulatory disclosures of 14 large U.S. brokers, the rating agency reported that, in 2025, 27% of total U.S. equity volume involved payment for order flow (PFOF) and 51% of options volume. The figures, it said, highlighted the importance of retail traders within those markets.
“Retail order routing practices have become a critical component of the U.S. equity and options market structure, particularly following the surge in retail trading activity since 2020 and given the rise of algorithmic proprietary trading firms that increasingly handle a substantial amount of retail equity and options trades,” it said.
Options orders account for the largest share of brokers’ revenues generated by payment for order flow, it noted — with US$3 billion derived from options in 2025, US$1.2 billion from equities that aren’t included in the S&P 500 index, and US$0.2 billion for S&P 500 equities.
Among the brokers that collect these revenues, only a handful of firms are reliant on them, the report said.
The large Wall Street firms have almost zero reliance on this revenue, it noted — whereas firms such as “Webull, Robinhood and TradeStation are less diversified and consistently report the most reliance on PFOF revenue, making them more vulnerable to regulatory or market structure changes that would limit or eliminate the practice.”
At the same time, market makers — principal trading firms that aren’t exchanges, alternative trading systems (ATS), or large Wall Street firms — are the primary trading venues that execute trades involving payment for order flow, the report noted.
“In 2025, market makers captured the vast majority of retail order flow for which payment was exchanged, at 96% of equities and 94% of options order flow,” Moody’s said.
Finally, the report noted that the pricing for these transactions is relatively standardized across venues, “suggesting competition occurs primarily through execution quality rather than price.”