Stock Market Reform – SEC Change the Rules 📉📈

Stock Market Reform – SEC Change the Rules

Ever since the GameStop fiasco in early 2021, the SEC has explored ways to fix the inner workings of the stock market. At that time, President Biden’s appointee Gary Gensler took office as the chair of the SEC, and to the demise of many his main focus is on patching the holes of the financial market. The biggest one is the issue of payment for order flow, where brokerage firms sell their orders to high-speed trading firms who profit off the small difference between the buying and selling price. With this system, the clients of a brokerage aren’t being prioritized as there’s a clear conflict of interest. Clients don’t get the best deal possible as brokerages look for who is paying the most instead of who can execute the order quicker, which is against what brokerage firms are obligated to do.

Gensler, along with many people on Wall Street, have heavily criticized this system and were looking to remove it altogether, but lobbying efforts from firms like Citadel have barred this from occurring. Instead, Gensler looks to increase the transparency of stock trade execution in multiple ways. One idea is an order competition rule, where trades would have to be exposed in open competition, before heading to the current brokerage systems where order competition isn’t present. The other common idea has been the “best execution” model, which would change the system completely by requiring brokerage firms to send customer orders to the place that gives the best available price, thus giving more power to the trader. These provisions are set to be presented at the SEC meeting next Wednesday, and if a majority of the panel supports it the SEC would discuss finalizing the rules and putting them into effect.

Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

Share:

More Posts

Load More
Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Facebook Twitter Youtube Instagram Snapchat Tiktok
learn
products
plan
Who we are
blog

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community.The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results.Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such.Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.