Payment for Order Flow and Option Internalization
研究期权批发商如何通过拍卖和限价订单簿内部化零售订单，并指出指定做市商在内部化中的优势及订单流付费对利润的保护作用。
Abstract Option wholesalers specialize in purchasing and executing against retail option order flow. Orders are internalized via auctions (which provide price improvement) and the limit order book. Designated market makers (DMMs) have a key advantage in internalizing limit order book trades: they obtain the first five contracts of any order they bring to an exchange where they are a DMM. We exploit variation in DMM assignments and allocation rules to highlight how these rules create a barrier to entry in option wholesaling that does not exist for equity wholesaling, protecting wholesaler profits and high option PFOF.