A controversial practice that has brought in billions of dollars to brokers and high-frequency trading firms is in the crosshairs of the Securities and Exchange Commission, and could be eliminated entirely.
“They get the data, they get the first look, they get to match off buyers and sellers out of that order flow,” he said. “That may not be the most efficient markets for the 2020s.” Payment for order is part of a larger issue with market structure that Gensler is trying to solve. He notes that about half of trading is in dark pools or is internalized by companies that keep those trades off exchanges. Even some of the trading that takes place on exchanges is opaque — and exchanges are paid through rebates that are similar to payment for order flow. Opaque markets where different investors have their trade orders processed differently have the potential for abuse.
There has been a boom in retail trading in the past two years, with millions of new investors signing on to brokerage apps to trade stocks, options, and cryptocurrencies for the first time. The boom has been driven in part by a change in the way that brokers make money on customer trading. Most brokers no longer charge for trades up front. They make money off trades by sending orders to market makers like high-frequency trading firms.
The company has told investors in securities filings that the SEC’s focus on payment for order flow is a risk factor. But company executives have played down the possibility of it being banned. “Our view internally is that we don’t expect payment for order flow to be banned,” said CFO Jason Warnick on Robinhood’s latest earnings call.
Good. And get on that with cryptocurrency too, already. It’s way overdue.
The SEC needs to leave this one alone... We are all adults...
Look at the people pissed that transparency is pricing is a thing. You think you’re not paying when a firm gets PFOF? You are, you just don’t see it.
horrible
The ol' $7/trade is looming
Just Do it!
That’s why I’d recommend not to use Robbinclub but Thinkorswim
Payment for order flow already banned in Canada.
is he trying to be relevant? there are other important issues he needs to take care of.
good
Giving everyone an opportunity to btfd in $hood because citadel makes way to much money off of these order flows
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