So basically they’re gonna figure out how to game the system for the institutional investors. I never thought that those “superstonks” folks would be proven right that the system is rigged, but there it is in plain text.
1. Banning payment for order flow. Basically all of r/wallstreetbets agrees with this, too.
2. Anti "gamification" of stock trading. I've commented on this a million times, but the fact that Robinhood graphs have no labels on their y-axis means those graphs are totally meaningless and only there to act like slot machine lights. If retail traders have the same trading options as before, but with real actual information instead of whizbang blinking lights, I don't see how this is a negative.
3. Competition issues because of dominant market makers. That proposal is 100% a benefit to small retail traders at the expense of huge market makers, which goes directly against your thesis.
> The U.S. House Committee on Financial Services on Friday called for the SEC, along with other regulators, to do more to protect the markets from similar events. read more
> The impetus for change came from the so-called "Reddit rally" of January 2021, in which GameStop Corp (GME.N) and other "meme stocks" popular on social media surged to extreme highs on buying from investors trading heavily through Robinhood (HOOD.O) and other commission-free retail brokerages.
> The intense volatility led to big losses for hedge funds that had bet against the meme stocks.
They don't like that the general populace was able to damage hedge funds, so they're making changes to stop it. I don't really know the changes technically, but the intent is right there.
Payment for order flow isn't actually the problem, large institutions not having, or willing ,to part with the margin collateral was. PFOF is just the gas they put in front to hide the real issue, and it's a real good one because removing it also hurts retail investors, making it unlikely to change much.
In the end, They will likely just put some rules in requiring these apps to more 'carefully educate thier customers on the risk of PFOF', basically continuing to protect the institution while insulting little retail investors as being too stupid for not reading the TOS carefully enough.
You don't have to agree with me, time will tell.
1) Limiting PFOF because it creates possible conflicts of interest.
2) Limiting "gamification" of trading via engagement prompts.
3) Adding sub-penny prices to exchanges to harmonize them with market makers. This is to encourage more orders to be sent to exchanges instead of market makers.
How are any of these things capitulating to institutional investors?
I'm pretty sure that it came from Socrates.
It always has been and it is made for the institutions to rarely lose and be ahead with the smart money over retail traders.
It’s not hard to beat them though - just don’t trade. Hold for 30 years in your 401k and you’re good.
Tbh this is like putting up the neighborhood poker players against WSOP champions. They might win in the short term but only through luck. Any retail trader getting into any but the most risk-averse type of index investing (ie the type of trade where they are aligned with the wider market anyway) is kidding themselves they can beat people who have at least a 100x advantage compared to them.
Meme stocks are HODLs; they don't need Robinhood.
This SEC action is about exploitative promotion of day trading -- WSB gambling, not MOASS.