Which one of the following is a criticism of preferencing?
A) There is a potential economic cost that is undisclosed.
B) Too many opportunities exist for the customer to benefit from price improvements.
C) It adds nothing of value to the price discovery process.
D) A preferencing broker plays too active a role in price setting.

Question

Quizplus · Accepted Answer

Preferencing is criticized for not adding value to the price discovery process because it involves directing orders to a preferred trading venue or market maker, often for reasons unrelated to achieving the best price or execution for the client. This can undermine the efficiency and transparency of the market by bypassing more competitive prices available elsewhere.

Which One of the Following Is a Criticism of Preferencing