dashboard



The stock market could soon see a massive change to how it functions

The stock market could soon see a massive change to how it functions



Why stocks are tumbling againReplayMore Videos ... (16 Videos)Why stocks are tumbling againTreasury secretary warns of 'unacceptable levels of inflation'How gas prices and inflation could impact midterm electionsScott Galloway: Before you start collecting 'dogs and kids' get back into the officeHistory-making NASA astronaut addresses lack of gender equality in space industryThe fastest growing trend in adult beverages will surprise youHere's how much businesses are raking in from the Queen's Platinum JubileeAirlines are scrambling as 'demand has come roaring back'Romans on job market: Strong but starting to show signs of down-shiftingLeBron James is a billionaire. This is how he built his fortuneSee what this amusement park is doing to combat staff shortages Social Security faces shortfall unless Congress actsJPMorgan Chase CEO warns of an economic 'hurricane''I was wrong': US treasury secretary admits she was wrong about US inflation in 2021How the Biden WH predictions about inflation are biting back nowWorkers consider cost of commute: 'It doesn't make sense'New York (CNN Business)The agency that oversees Wall Street is weighing major changes to the way millions of everyday investors buy and sell stocks. That could be bad news for so-called free-trading apps like Robinhood as well as the lesser known firms that underpin their business models.

Today, when you buy or sell a stock on an app, the trade appears to be instantaneous. But beneath that simple buy/sell action is a complex web of Wall Street players exploiting tiny differences in price to rake in huge amounts of cash. Here's how it works: When you tap buy or sell, Robinhood (or your broker of choice), takes your order to a firm known as a wholesaler or market maker — the middlemen who are supposed to get you the best price and who pay the brokers for the privilege of executing the trades. They typically make pennies off each transaction. That process is known as "payment for order flow," and it has come under intense scrutiny by regulators following the fallout from the January 2021 run-up in meme stocks like GameStop. Confused about this GameStop saga? Here are the 5 things you need to knowThe GameStop frenzy "exposed how rigged the US equity markets are to enrich big Wall Street firms, high frequency trading firms and brokers at the expense of Main Street retail investors," Better Markets CEO Dennis Kelleher wrote at the time. Read MoreThe Securities and Exchange Commission has been reviewing the system, which accounts for the bulk of the brokerages' revenues. In August last year, Robinhood's stock tumbled after SEC Chairman Gary Gensler said that an outright ban of payment for order flow was "on the table." Gensler and other critics of the process say the brokers market makers, such as Citadel Securities, have a clear conflict of interest, and that payment for order flow screws over everyday investors while amassing huge wealth for Wall Street firms.Now, it appears that the SEC may roll out new rules as early as Wednesday, according to The Wall Street Journal, citing unnamed sources. One proposed new rule, the paper said, would add more competition at the middleman level to ensure retail investors are actually getting the best prices. In that scenario, orders would be routed into auctions where trading firms would have to compete to execute them. Representatives for the SEC and Robinhood didn't immediately respond to CNN Business' request for comment. — CNN Business' Matt Egan contributed to this article.


Click Here To Get Funded!