They would also require dealers executing trades to ensure the best price for investors and to improve transparency around the procedural standards brokers must meet when handling and executing orders. To enhance order-by-order competition, the new rules would call for “open and transparent” auctions aimed at providing investors better prices. Many investors purchased shares using commission-free brokers such as Robinhood. PFOF came under regulatory scrutiny last year when an army of retail investors went on a buying spree of “meme stocks” like GameStop and AMC, squeezing hedge funds that had shorted the shares. Reuters first flagged the reforms in March. They could also affect brokers' ability to offer commission-free trading to retail investors. The intended changes would fundamentally alter the business model of wholesalers. The public could then weigh before the SEC votes on whether to adopt them.ĭan Gallagher, Robinhood’s chief legal, compliance and corporate affairs officer, said his firm “looks forward to reviewing the Commission’s eventual rule proposal and engaging with the SEC during a meaningful notice and comment rulemaking process”. Gensler’s announcement would generate any formal proposals in the fall. Gensler said if PFOF is still allowed, the SEC wants rules to mandate market makers disclose more data around fees these firms earn and the timing of trades. “Let’s keep our eye on the retail investor who has never had it better as far as liquidity and low cost trading,” said Kirsten Wegner, who leads the Modern Markets Initiative, a Washington-based group that represents high-speed trading platforms.
unintentionally taking us back to a period that looks worse that how it looks today.”
“We talk about how our markets are the envy of the world,” said Mecane. Joseph Mecane, head of execution services at Citadel Securities warned against broad plans to revamp the market. “Too many in the financial industry today get rich from anti-competitive and predatory practices in highly fragmented markets that result in retail investors being mistreated if not ripped off,” said Dennis Kelleher, the chief executive of Washington-based advocacy group Better Markets, who supports the SEC’s plans. But financial industry executives quickly blasted the plans, saying they could hinder commission-free brokerages from serving more investors. Investor advocates praised the SEC’s plan, which would be the biggest shake-up of US equity market rules in over a decade.
NONE OF MY BUSINESS MEME UPDATE
“I asked staff to take a holistic, cross-market view of how we could update our rules and drive greater efficiencies in our equity markets, particularly for retail investors,” Gensler said. Yesterday, he said the practice has “inherent conflicts”, while noting some zero-commission brokerages operate without PFOF. In December 2020, Robinhood actually paid a fine related to the practice, which the SEC said raised costs for investors using the online brokerage.Ī ban on the PFOF practice is not off the table, Gensler has said. Some brokers, such as TD Ameritrade, Robinhood Markets and E*Trade, accept these payments from wholesale market makers for orders. The Wall Street watchdog plans to scrutinise growth in recent years of the payment for order flow (PFOF) practice, which is banned in Canada, the UK and Australia. US Securities and Exchange Commission (SEC) chair Gary Gensler told an industry audience he wants to require trading firms to directly compete to execute trades from retail investors. WASHINGTON/NEW YORK: The top US securities regulator yesterday unveiled a planned overhaul of Wall Street retail stock trading rules, aiming to boost competition for handling orders by commission-free brokerages to ensure mom-and-pop investors get the best price for trades.
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