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Robinhood jumps, then loses steam after report that SEC will not ban payment for order flow


A girl holds a smartphone with the Robinhood emblem within the background.

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Shares of retail brokerage Robinhood had been little modified on Thursday, giving up early positive aspects, after a report that U.S. regulators would not ban payment for order flow, a key a part of the corporate’s enterprise mannequin.

Bloomberg News reported that the Securities and Exchange Commission would cease in need of banning payment for order flow, although the regulatory company should still make rule adjustments that might decrease the profitability of the apply.

Shares of Robinhood had been up lower than 1% in noon buying and selling after being up greater than 11% earlier within the session.

Payment for order flow is a controversial apply that successfully permits market makers and brokerage companies to separate the revenue made on trades from retail clients. It is a key income for Robinhood and different low-cost brokerage companies, and it helps them supply buying and selling with no upfront price.

SEC Commissioner Gary Gensler has been essential of the apply, questioning whether or not the payment relationships between market makers and brokerage companies was hurting the execution worth for buyer trades.

“Our markets have moved to zero commission, but it doesn’t mean it’s free. There’s still payment underneath these applications. And it doesn’t mean it’s always best execution,” Gensler instructed CNBC’s “Squawk on the Street” final 12 months.

Robinhood and the SEC did not instantly reply to requests for remark.

Source: www.cnbc.com

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