There is a broker named Robinhood in United states. They don't charge any brokerage but in their disclosure to govt. agency they declared that they are selling clients order to high frequency trading firms and they get paid for that.
So how do we know brokers like finvasia are not doing the same.
In comparison to USA , India is not as strict about disclosures so can I assume that free' brokers are doing the same as Robinhood and not telling the clients or authorities?
If I'm not mistaken, regulations in India are much stricter than those in the US with respect to such things, & I don't think selling order-flow is even legal here; & it's difficult to do so because people can verify their orders on the exchanges, & so can you. Moreover, to my knowledge, almost every broker in the US sells their order-flow anyway, though perhaps, you might be better off with one broker than another but that also depends on the type of execution as well as trading-strategy (like investor vs scalper). More on that here - https://www.stockbrokers.com/guides/order-execution
Here's TDAmeritrade's disclosure on the order-flow sold by them - https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD2054.pdf
So, it's not just Robinhood doing it.
Can you elaborate, how does it affect us (retail traders), if they are doing so.
When brokers in the US do that, you can get a marginally worse price than you would have otherwise gotten on an order directly going to an exchange. Of course, not everyone cares about such a thing, especially the investor-type people wouldn't care since they might lose more in commissions with another broker anyway but scalpers & other day-traders on per-share-plans could potentially see a larger impact on their execution-quality & daily P/L.