payment for order flow

The industry practice of market makers paying brokers for the right to execute the broker's clients' buy and sell orders. Payment for order flow enables zero-commission trading but raises questions about whether individual investors are having their trades executed at the best possible price. The U.S. Securities and Exchange Commission (SEC) position is that “a broker-dealer does not violate its best execution obligation solely because it receives payment for order flow or trades as principal with customer orders.”