[throwacomment]

PFOF does two things and you're only focusing on half of it.

1. It segments the counterparty they trade with.

2. They get dibs on new orders arriving.

You're only talking about 1. I'm talking about 2.

1 is also bad because this segmentation also gives them inforamtion no-one else can get. But the chain of reasoning to concretely show why its bad (for someone getting their orders PFOF'd) is less obvious and longer.

> Imagine you are a market maker: you offer 2 APIs.

This is so wildly different from how market works. You'll have to clarify what you mean. If the only way to trade is through the API, then you'll offer infinite spread on both. If normal markets exist alongside, then I don't bother using either.

[wrsh07]

I'm not sure what to say. Your arguments are extremely hypothetical and there's no evidence of the claimed badness today.

I don't find them convincing - why is it bad that someone paying for exclusive access to data gets exclusive access to that data? There are so many exclusive data vendors in financial markets, this one seems relatively low value