Shares of both Robinhood and Virtu Financial were up as much as 10% this morning, after it was announced that the “US Securities and Exchange Commission will stop short of banning payment for order flow”.
Payment for order flow is a major source of revenue for firms like Robinhood, and their trading partners, like Citadel. Looming regulatory discussion over the matter has been a wet blanket over the stocks of companies that participate in the practice.
But it appears at least some of that overhang has now been lifted. The decision comes after “months of internal deliberations” at the SEC, according to Bloomberg News, who cited people familiar with the matter.
Despite stopping short of banning PFOF outright, the SEC still may enact other regulatory changes that could make the process less profitable, the report says.
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