This week comedian and TV star Jon Stewart shined a big bright light on the subject of payment for order flow in equities trading on an episode of his show, The Problem with Jon Stewart. While his take is always entertaining and sometimes impactful, I wanted to share with you another source that has also looked at the subject.

Hitesh Mittal and Kathryn Berkow of BestEx Research released a paper last year titled “The Good, The Bad & The Ugly of Payment for Order Flow” that looked at the impact of the practice on institutional investors. The paper was in response to payment for order flow becoming topical again after the Game Stop -Gate controversy that saw Robinhood and other firms restrict investors ability to buy shares of this then widely volatile company.

I interviewed Hitesh over Zoom this week and asked him about his firm, why he and Kathryn wrote the paper, what surprised them, the impact of payment for order flow on institutional players, the impact of payment for order flow on retail traders, interesting statistics they found and if anyone paid them to do the research.