The mainstay of the US stock exchange seeks to change the rules of stock trading, including payments made by large groups of Wall Street to fulfill the orders of customers, after the explosion of “meme” shares in January, the market was highlighted “inefficiency”.
On Wednesday, Gary Gensler, chairman of the Securities and Exchange Commission, said he had asked the agency to make suggestions for changing a number of rules in the market structure. Announcement of shares being traded 7.7% less than Virtu Financial.
The review will cover the controversial issue order flow paymentwhere retailers receive payments from market makers such as Virtuունn Suskehanna to regulate their transactions. Instead, they promise to trade at current market prices or better.
Gensler says the SEC is also exploring programs that encourage “gifting” business through email signals, hints, and animations.
“The question is whether our stock markets are as efficient as they could be in the face of technological change and recent developments,” he said at a conference of Piper Sandler in New York.
Many of the issues came to the attention of regulators and policymakers in January, when traders swapped shares in GameStop and other companies at GameStop, exchanging ideas for Reddit social media and using trading platforms.
The large-scale move has drawn attention to the dominance of one group of pay-as-you-go orders, the private Citadel Securities, which accounts for nearly half of US retail sales. It is Virtu the second largest market maker.
The new rules could have repercussions on brokers’ business models, particularly Robinhood, which prepares the initial public offering – as the order is paid for the fact that they receive subsidies for clients with zero commissions.
“Brokers make a profit when investors trade,” Gensler said. “For brokers who have these arrangements, not everyone does, the larger the trading volume, the higher the payment flow for the order. “What makes the current zero-brokerage environment different is that investors do not see their costs in trading, so they can be perceived as free.”
In a statement following Gensler’s remarks, Robinhood said he “expects to be involved with the SEC in enacting its rules as it takes into account changes in the current market structure that work so well for more and more diverse investors.”
Gensler said concern: He has paid several times for the flow of orders since becoming president of the SEC in April, but his comments on Wednesday suggested he intended to pursue a full overhaul of the market structure.
He noted that the staff will discuss the increase in minimum stock prices, the rules that ensure the best possible price for customers for their transactions, in a fixed system known as the National Best Offer.
He also questioned whether the US system for providing the best price to customers was adequate enough, as the rules did not apply to banks’ in-house book-to-market transactions, known as dark pools.
SEC chairman backs calls to reduce US stock trading time required over two days after some market participants, including Robinhood retail brokerage, cited it as a possible factor in restricting trading of some memes in January for decision making. ,
“I remember an old saying in the markets,” said Gensler. “Time equals risk.”