Payment For Order, Woah

The U.S. Securities and Exchange Commission (SEC) is working on new rules for the nearly $50 trillion American equities market. And after months of internal discussions at the agency, it is reportedly no longer considering banning payment for order flow (PFOF).

We covered this story in June when the SEC began seriously considering the move, so we’d recommend checking that out as a refresher on the topic. 👀

According to one insider, industry pushback has resulted in the SEC shifting its focus towards other ways of making the market more transparent. While the regulator declined to comment on the rumor it’s dropping the ban; it said it’s considering a range of possible changes.

The news sent shares of high-frequency-trading firm Virtu Financial up 8.55% today. Brokers like Robinhood, who rely on PFOF for a significant portion of their revenues, also popped initially before trading back down with the rest of the market. 📈

Today’s unexpected news caused a stir among retail investors who view the PFOF practice as predatory. Gary Gensler and the SEC have made steep promises of increasing market transparency and fairness. And after a few wild years in the markets, many argue the agency has failed to deliver.

The proposed rule changes should be released before year-end, so we’ll just have to wait and see what happens.

For now, though, it appears we’re right back to where we started… 🤷

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