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Disciplined AI agents are the disruptor needed to break the exchange churn modelOpinion

In just a few weeks, several companies – including Anthropic, Circle, MoonPay, and Gemini – introduced new tools for financial services, marking the start of a competitive push into ‘agentic finance’. While these products are innovative, the core business model remains consistent: exchanges and brokerages profit when customers trade more frequently, and the impact of this on customer investments is clear. Essentially, the technology for these automated financial tools is developing faster than the systems needed to ensure they benefit customers.

The perverse incentives exchanges hope you miss

The core problem within the financial industry is how incentives are set up. Traditional brokerages and exchanges don’t necessarily benefit when *you* succeed, but when you trade frequently. New platforms like crypto exchanges and neobrokers have only made trading quicker, less expensive, and unfortunately, more habit-forming. Essentially, banks make money from long-term customers, exchanges profit from high trading volumes, and AI benefits from constant use. A truly trustworthy financial advisor would be one who only gets paid when *your* investments perform well, which fundamentally challenges how brokerages and exchanges currently operate.

While it seems like you can trade without paying commissions, that’s not entirely true. In 2025, firms that execute trades paid over $4.9 billion for order flow – essentially paying brokers to direct trades to them – a significant increase from the $3.8 billion paid in 2021. This same principle applies to cryptocurrency. In early 2026, crypto derivatives trading reached $18.6 trillion – making up 70% of all crypto trading – and these short-term trades are far more common than traditional buying and holding. The way exchanges are set up actually encourages frequent trading, prioritizing speed over careful investing.

Robinhood once depended on payment for order flow (PFOF) for over 75% of its income. PFOF is how “free” trading actually works – market makers pay Robinhood to handle customer trades. This system encourages frequent trading, even though trading often can hurt investors’ long-term financial gains.

Robo-advisors and traditional financial advisors both have fees, but they work differently. Robo-advisors typically charge 0.25% of your total investments annually, regardless of how well those investments perform. Human advisors usually charge around 1% of your initial investment, even if your account loses value. This means advisors are paid even when you lose money – it’s built into how their fees are structured.

Less exchange friction makes bad trades easier to repeat

It’s a tough reality, but stock exchanges profit from trading volume, not from investors winning. They make money every time a trade happens, even if most retail investors – studies show between 74% and 89% – end up losing money. These platforms charge fees at every stage, and advanced, AI-powered exchanges could actually speed up the process of leading you to another losing trade.

On April 14th, the SEC approved FINRA’s change to the Pattern Day Trader rule, getting rid of the $25,000 minimum account balance requirement. This change is expected to increase trading activity, leading to more orders being placed. Ultimately, this benefits brokers because they earn money from every trade, regardless of whether their customers are making or losing money.

Enter AI agents, paid to improve customer P&Ls

What’s needed to break the cycle of losses for individual traders is a new type of tool – one that prioritizes protecting customers over maximizing trades. Unlike traditional exchanges, this tool would focus on fewer, smaller trades, and actively prevent impulsive decisions, especially during turbulent market conditions. Often, the smartest move in a volatile market is simply *not* trading, and reducing risk before emotions cloud judgment. Maintaining this discipline is difficult for exchanges to encourage, as it naturally leads to fewer trades. However, an agent that profits by safeguarding customers’ money offers a fundamentally different and potentially more beneficial approach.

The next battleground is who profits from the agents’ order flow

Financial regulators are challenging the traditional model of offering “free” trading. A new European Union rule, effective June 30, 2026, will eliminate the income source that allowed some German and Austrian online brokers to offer trades without commissions. Trade Republic, a popular European investment platform, has already found a way to comply with regulations and obtain the necessary license to continue processing trades internally.

As traditional finance struggles with its current systems, I’m seeing a lot of innovation in crypto focused on building the infrastructure for AI-powered trading. These AI ‘agents’ need incredibly fast and efficient systems – think tiny price differences, readily available funds, and execution in milliseconds. They’re leveraging things like nanopayments, with protocols like Circle’s, to make transactions seamless. Platforms like Hyperliquid are even offering gas-free trading for perpetual contracts, though they still charge maker-taker fees. But the key question isn’t just about eliminating friction; it’s about who will benefit when these agents start using these efficient systems for high-frequency trading.

Independent programmable agents are better middlemen

For years, stock exchanges and brokers have profited by encouraging frequent trading, even if customers don’t fully understand the risks and barely notice small fees. Any trading tool created by an exchange will naturally prioritize the exchange’s own interests. Therefore, it’s unlikely an exchange would create a tool that directs trades to a cheaper competitor – they wouldn’t do so willingly.

Unlike traditional systems, an independent agent focuses solely on growing and safeguarding a customer’s investments, directing trades to achieve the best possible results. Their rewards are directly linked to the portfolio’s success through automated, transparent contracts. Customers have full visibility into how their funds are used and how the agent is compensated. This setup ensures customers retain more of the value that is often lost to exchanges through practices like order flow payments, inflated price differences, and interest earned on uninvested cash.

The system prioritizes smart, strategic trading over simply making lots of trades. It will trade frequently when there’s a clear, strong signal, reduce its positions when risks increase, and remain inactive during periods of market uncertainty. The first platform to demonstrate this behavior transparently on the blockchain will offer everyday investors a more equitable experience, aligning its financial incentives with their own.

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2026-05-28 17:43