PFOF = Payment for Order Flow

PFOF is a practice in which a broker receives compensation from a third party, typically a market maker, in exchange for routing its clients' trade orders to that party for execution. Essentially, brokers direct orders to certain market makers who then execute the trades, and, in return, the market maker pays the broker a small fee. This practice is common in retail trading and is controversial because, while it can lead to lower or zero-commission trading for retail investors, it may create conflicts of interest regarding whether the broker is securing the best possible execution price for its clients.