Aligning with our community

Public
Public
Feb 1 · 3 min read

This last week was a historic moment for retail investing. Notably, it has shed an unprecedented amount of light on the discussion around “if you’re not paying for the product, you are the product.”

It seems that everyone has been focused on democratization — but at the cost of transparency.

Since the inception of this company, we have said that the reason most people don’t participate in the stock market is not because of commission fees, but rather because of a lack of financial literacy. This was literally the first slide of our pitch deck.

We’ve given a lot of thought to the future of our industry and have come to the conclusion that most players have been following each other — without actual leadership. We were part of that. We started off with zero commission, accepting it as the standard of the industry — and in turn, we participated in Payment for Order Flow (PFOF). This is a practice where brokerages are paid to route orders to market makers for trade execution, creating a potential conflict of interest between brokerage and customer.

To do the right thing for our customers, we have to lead the industry with first principles thinking, and proper values.

Public will stop participating in Payment for Order Flow and introduce tipping.

To align our incentives with those of our members, we will stop participating in the practice of PFOF and instead introduce a tipping feature on trades. By doing this, we can remove this conflict of interest from our business model.

Trades will remain commission-free and tipping is entirely optional. Members of the Public.com community can freely decide if they’d like to leave a tip to help pay for the cost of executing their trades. The reality is that there is no such thing as free trades.

We have notified our clearing firm that we want to be off the “PFOF rails,” and we started the process of getting that done on Saturday, Jan. 30. With the help of our clearing firm, Apex, we will route all orders directly to exchanges (e.g. Nasdaq and the NYSE).

Direct routing to the exchanges is more expensive, and therefore we’re turning what used to be a revenue stream (PFOF) into a cost center and we’re optimistic that the difference will be offset by the optional tipping feature. This process of transitioning to exchange execution may take a few weeks, and we’ll share updates on Twitter.

Let’s be clear, we are still a business. We need to make money, pay people’s salaries, and make our shareholders happy. If we succeed, we hope that one day, Public.com can be publicly traded as well, so that anyone can be an owner of this company and benefit from its success.

A core principle at Public is that “feedback comes from a place of care.” It’s about understanding that feedback is a gift, especially if we’re all aligned towards the same goal. We hope this change to our business model will achieve more alignment, and that you, our members, will continue to give us the gift of feedback (we’re always listening at hello@public.com and @public).

The foundation of this company is built on the idea of bringing the stock market to the public. It has become abundantly clear to us that staying true to our mission requires that our incentives align more closely with those of our community members. Transparency is a core pillar of building trust, and we think it’s important that we live up to our name.

Join us ✊💙
Leif, Jannick & the entire Public team

Public Stories

News, Updates & Insights from the Public.com Team

Public

Written by

Public

Public is a new kind of stock brokerage. We make it possible to buy any stock with any amount of money. Disclosures: https://public.com/disclosures

Public Stories

News, Updates & Insights from the Public.com Team

Public

Written by

Public

Public is a new kind of stock brokerage. We make it possible to buy any stock with any amount of money. Disclosures: https://public.com/disclosures

Public Stories

News, Updates & Insights from the Public.com Team

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store