US Securities and Exchange Commission does not want to ban controversial payment-for-order practice after all

new York The US Securities and Exchange Commission will not ban brokers from the controversial practice of payment for order flows after all. This is reported by the Bloomberg news agency, citing insiders. This keeps a practice legal, which primarily brings brokers such as Robinhood and Virtu a large part of their income. Their share prices increased by more than ten percent on Thursday in New York.

With the so-called Payment-for-Order-Flow (PFOF), brokerage houses such as Robinhood or Charles Schwab can forward orders from small investors directly to large trading houses such as Citadel or Virtu, which process these orders. In return, the brokers receive discounts or payments for the referral.

This is an important source of income for brokers specializing in small investors, such as Robinhood, because they usually do not take any fees from their customers. However, regulators fear that orders will not be routed to those offering the best prices but rather the highest rebates.