Wall Street’s top cop said Tuesday that Citadel Securities’ dominance in order flow routing may not be offering retail investors the best deal.
U.S. Securities and Exchange Commission Chairman Gary Gensler Told Senate Banking Committee He Is Concerned About Citadel Securities 47% market share on all listed retail volume in the United States. Virtu Financial (VIRT), another wholesaler, controls around 25-30%.
I’m a pro competition, and I’m not sure the order flow payment system is really the best competitive landscape, Gensler said.
Gensler did not mention Citadel Securities by name, but footnotes in SEC chairs prepared remarks made.
The SEC did not rule out the possibility of a total ban when paying for order flow, the practice of a brokerage house (like Robinhood) passing stock purchase orders to a wholesaler (like Citadel Securities) to locate and execute them.
When these wholesalers find a stock at a lower price than what the investor ordered, the savings are split between the wholesaler and the brokerage, who can then pass the cost savings on to the investor in the form of a better price. The order flow payment model is one of the main reasons brokerage firms like Robinhood (HOOD) can offer commission-free trades.
Wholesalers also get discounts from exchanges like the New York Stock Exchange for providing liquidity, thus strengthening their role as intermediary in stock transactions.
I think the conflicts inherent in order flow payment and exchange discounts can both make our markets less efficient, Gensler said.
Yahoo Finance reported that Gensler raised the issue of the concentration of retail order flows at the first White House Competition Council meeting last Friday, a move by President Joe Bidens to push federal agencies to curb sales. anti-competitive behavior.
Everything on the table
Questions remain about how the SEC will proceed with any reform.
The former Goldman Sachs banker hinted at not only the possibility of banning payment from the order flow, but also rethinking discounts and how prices are benchmarked against criteria set by National Best Bid and Offer ( NBBO).
In this area, everything is on the table, Gensler said, adding that the SEC’s sole objective is to encourage competition to reduce costs and increase the efficiency “of the structure of the stock market.
Once an obscure mechanic of the brokerage industry, order flow payment gained national attention during the frenzy of early 2021 on meme stocks like GameStop (GME).
Many brokerages have followed Robinhood by leaning more into order flow payment as they eliminated commissions, although Fidelity remained resistant to the model.
After being taken to Capitol Hill to testify after the rise of GameStop froze some trading activity, Citadel Securities Ken Griffin said paying for the order flow has been of benefit to the brokerage industry and the investor retail in general.
This has been very important for the democratization of finance, it has allowed the US retail investor to have the lowest cost of execution he has ever had in the history of the US financial market, said Griffin.
Gensler said on Tuesday that the SEC was set to release its report on the memes stock episode, noting that other SEC commissioners were currently reviewing it.
Brian Cheung is a reporter covering Fed, Economics and Banking for Yahoo Finance. You can follow him on Twitter @bcheungz.
The mention sources can contact us to remove/changing this article
What Are The Main Benefits Of Comparing Car Insurance Quotes Online
LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos
to request, modification Contact us at Here or [email protected]