Robinhood jumps after report that SEC will not ban payment for order flow

A lady holds a smartphone with the Robinhood emblem within the background.Rafael Henrique | Sopa Photos | Lightrocket | Getty ImagesShares of retail brokerage Robinhood popped Thursday after a report that U.S. regulators wouldn’t ban cost for order circulate, a key a part of the corporate’s enterprise mannequin.Bloomberg Information reported that the Securities and Change Fee would cease wanting banning cost for order circulate, although the regulatory company should make rule adjustments that would decrease the profitability of the apply.Shares of Robinhood have been up greater than eight% in premarket buying and selling.Fee for order circulate is a controversial apply that successfully permits market makers and brokerage corporations to separate the revenue made on trades from retail clients. It’s a key income for Robinhood and different low price brokerage corporations, and it helps them supply buying and selling with no up-front price.SEC Commissioner Gary Gensler has been important of the apply, questioning whether or not the cost relationships between market makers and brokerage corporations was hurting the execution worth for buyer trades.”Our markets have moved to zero fee, but it surely doesn’t suggest it is free. There’s nonetheless cost beneath these purposes. And it doesn’t suggest it is at all times finest execution,” Gensler informed CNBC’s “Squawk on the Avenue” final yr.Robinhood and the SEC didn’t instantly reply to requests for remark.

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