How Do Retail Brokers Profit from Routing Orders to Different Venues?

Retail brokers profit primarily through 'payment for order flow' (PFOF), where they receive compensation from market makers or dark pools for directing client orders to them. They also profit from the bid-ask spread if they internalize orders.

By routing orders to venues that offer the best rebates or execution quality, they maximize their revenue, though PFOF can raise concerns about prioritizing profit over the absolute best price for the client.