We demonstrate that off-exchange (wholesaler) executions provide significant cost savings to retail investors. Wholesaler concentration has raised regulatory concerns; however, we show that the largest wholesalers offer the lowest costs due to economies of scale. The entry of a new large wholesaler reduces incumbent scale economies, resulting in higher execution costs. Most retail brokers route to multiple wholesalers and actively monitor their performance, rewarding those offering lower execution costs with more volume. While retail investors benefit from the current landscape across all stocks, those trading small stocks benefit the most.

Are endogenous liquidity providers (ELPs) reliable in times of market stress? We examine the activity of a common ELP type—high frequency traders (HFTs)—around extreme price movements (EPMs). We find that on average HFTs provide liquidity during EPMs by absorbing imbalances created by non-high frequency traders (nHFTs). Yet HFT liquidity provision is limited to EPMs in single stocks. When several stocks experience simultaneous EPMs, HFT liquidity demand dominates their supply. There is little evidence of HFTs causing EPMs.