Robinhood falls after SEC's Gensler says payment for order flow ban is 'on the table'

ajacobson

ajacobson

Aug. 30, 2021 3:41 PM ETHOOD, SCHW...Interactive Brokers Group, Inc. (IBKR)LPL Financial Holdings Inc. (LPLA)By: Josh Fineman, SA News Editor37 Comments




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  • Robinhood Markets (NASDAQ:HOOD) hit session lows,down 8.7%, after SEC Chairman Gary Gensler said a full ban of payment for order flows is "on the table."
  • Gensler made the comments to Barron's in an interview. SEC staff is reviewing the practice and may come out with its recommendations in the coming months.
  • Gensler told Barron's that the practice has an "inherent conflict of interest."
  • Virtu Financial (NASDAQ:VIRT) also neared session lows, dropping 4.4%. Charles Schwab (NYSE:SCHW) fell 2.6%.
  • Gensler's comments come after Fox Business reporter Charlie Gasparino tweeted earlier this month said that Democrats shelved plans to ban "payment for order flow" and will instead "study" the issue.
  • Robinhood's business, which gets most of its revenue from "payment for order flow," is under scrutiny as Gensler earlier this year ordered a review of market structure issues, including PFOF.
  • On Friday, the SEC was asking for information and public comment on the game-like tools and other features used by broker-dealers and investment advisers in digital trading apps. That would apply to Robinhood (HOOD), Webull, and other trading apps and websites. In June, Gensler outlined a plan to update SEC rules, including possible regulations on stock trading gamification.
  • In December, Robinhood (HOOD) agreed to pay $65M to settle charges made by the SEC that the trading app failed to seek the best reasonably available terms to execute customer orders.
 
ajacobson said:
said a full ban of payment for order flows is "on the table."
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They'll need to tip off Cathy Wood before they do that.
July 30, 2021 1:38 pm ET
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Cathie Wood, founder and CEO of ARK Invest.
Photograph by William Crooks

Robinhood Markets stock tumbled more than 8% from its offer price on its first trading day, but that didn’t stop ARK Invest’s Cathie Wood from scooping up shares of the trading website.
Wood, known for being an outspoken stock picker and innovation bull, bought about 1.3 million Robinhood (ticker: HOOD) shares on Thursday for the $23 billion ARK Innovation ETF (ARKK), according to the fund company’s public data on its daily trading activity. Those shares are worth roughly $45 million based on the stock’s Thursday close...... https://www.barrons.com/articles/ar...k-despite-its-dismal-market-debut-51627666716
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Ban payment for order flow on Wall Street? Fat chance!

That is essentially the view of Thomas Peterffy, founder and chairman of Interactive Brokers Group Inc. IBKR, +0.48%. , on the challenges that the Securities and Exchange Commission faces as it considers eliminating a Wall Street practice that has existed for decades: payment for order flow.

‘I do not see how he gets it done without ruffling a lot of feathers.’

— Thomas Peterffy, founder Interactive Brokers Group
In an interview with MarketWatch, the Hungarian-born billionaire Peterffy, who was one of the pioneers of computerized stock trading, said he doesn’t see a ban on payment for order flow, or PFOF, happening under Chairman Gary Gensler’s tenure because implementing such restrictions may be too challenging. And even with a policy in place, institutions could still finagle workarounds.
https://www.marketwatch.com/story/t...ment-for-order-flow-11630442233?mod=home-page
 
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