The Clap
The Securities & Exchange Commission (SEC) is exploring changes to the stock market in an effort to make it more competitive & protect retail investors.
The deets
One big change reportedly wants online brokerages like Robinhood (NASDAQ: HOOD) & Charles Schwab to send most individual orders to auctions, where trading firms compete to execute them.
This is opposed to the current payment-for-order-flow (PFOF) structure, where brokerages like Robinhood send retail orders to market makers like Citadel Securities or Virtu Financial. Robinhood argues that market makers offer better prices than the Nasdaq Exchange itself, for example.
You should know
Citadel Securities executes half of all retail trading volume, & some argue that this structure gives companies like Citadel sufficient knowledge of market trends.
