Gensler, whose nomination was endorsed by Senator Elizabeth Warren, repeatedly expressed concern about the"inherent" conflicts of interest that exist in the payment-for-order flow business model used by Robinhood and other brokerages that don't charge commissions.
Gensler, who was known as the toughest regulator of the Obama era, promised to"take a closer look" at payment for order flow and noted that both Canada and the United Kingdom banned the practice. He also pointed out that not all zero-commission trading apps use the business model. "There are costs. It's like an iceberg: Most of the iceberg is below the surface," the SEC chief said."The costs are below the surface."Gensler also pledged to look into concerns about the broader structure of the modern stock market, including the"dominant" position held by Citadel Securities, the market maker owned by billionaire Ken Griffin.
Moreover, Gensler signaled concern about the information Citadel Securities holds due to its dominant position. "We simply play by the rules of the road," Griffin said during a February hearing on GameStop."If they choose to change the rules of the road, we need to drive on the left side versus the right side, that's fine with us."Like other regulators, Gensler expressed unease over the embedding of game-like features into trading apps to increase customer engagement. He asked SEC staff to look into these issues.
"The streaming apps figured out a long time ago that I'm kind of a rom-com guy," said Gensler."You thought I was a thriller guy, but it's rom-com. If I lose an hour and a half and it was a lousy rom-com, alright."
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