These obvious admissions are ridiculously overdue, but public comments by the new Securities Exchange Commission (SEC) Chair Gary Gensler offer a glimmer of regulatory hope.
Gensler admitted this week that payment for order flow — the back-end payment brokerages receive for directing clients’ trades to market makers — has “an inherent conflict of interest” and that banning the controversial practice is “on the table.”
Shares of the ironically named customer-abusing-trading platform Robinhood tumbled on the news. Still, the implications are far-reaching: most major brokerages now collect billions selling their customer orders to predatory trading firms.
The Securities and Exchange Commission also said Friday it is stepping up its inquiry into so-called gamification and behavioral prompts used by online brokerages and investment advisors to prod people to trade more stocks and other securities, adding:
“investors can be misled by rosy projections of profit by technologies that, in reality, understate the risk of a particular investment or the odds of eye-popping returns”.
Do ya think??
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