LogFAQs > #950071989

Forceful_Dragon posted...

But the stock and money still change hands as a part of this process to the point that each party has either the stock they bought or the money they got afterwards.

So where is the middleman liability?

In the example I read the key is that the middlemen are not simply facilitating 1:1 exchanges. They are trying to buy in bulk, at a reduced rate, sell to many users buying small amounts at the "true" rate, and then pocket the extra. And in this scenario Robinhood is an extra step since they don't buy/sell themselves, they pass along their user data to those doing the actual buying and get paid a finder's fee. This basically is a hack for the fact that the market is not designed to benefit small user transactions like this, while also serving as a way for the huge firms and middlemen to profit. If it's a situation like GME where it's so volatile that the middlemen are like "I dunno about this one fam" or Robinhood's partners literally run out of money to buy because what they want to be doing is selling it for gains, there's nothing they can do.

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