Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 


SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

U.S. SEC chair signals sweeping review of exchange, broker rules

06/09/2021 | 02:09pm EDT

WASHINGTON, June 9 (Reuters) - Gary Gensler, chair of the U.S. markets watchdog, has asked his staff to recommend rules for ensuring fair competition between exchanges and brokers, signaling a potentially major shake-up for the U.S. equities markets.

The Securities and Exchange Commission (SEC) rules would address "payment-for-order-flow," "best execution" and the "national best bid and offer," among other structural issues, he told a virtual conference on financial technology and global markets at Piper Sandler on Wednesday.

The aim was to make markets as efficient as possible, Gensler said.

Payment-for-order flow, whereby wholesale market makers pay broker-dealers to send them client orders which they execute on their own trading platform or a third-party platform, raises a number of conflict-of-interest questions, he said.

Critics say it creates an incentive for brokers to send orders to whichever market-maker pays them the highest fees, rather than the venue that might get the best deal for customers, also known as "best execution."

Market-makers say the business model has increased liquidity and reduced costs for average investors.

"Are customers getting best execution in the context of that conflict? Are broker-dealers incentivized to encourage customers to trade more frequently than is in those customers’ best interest?" Gensler asked during his speech.

The SEC review follows January's Reddit rally during which retail investors coordinating on Reddit and trading through low-cost brokerages drove up GameStop and other "meme stocks."

Amid the intense volatility, several retail brokers restricted trading in the affected stocks, which took the steam out of the rally, causing an uproar among retail traders.

Robinhood, an online retail brokerage, said on Wednesday that it looks forward "to engaging" with SEC as the agency considers changes to equity market structure.

The saga also highlighted the small number of market-makers that dominate the retail market, with Citadel Securities executing roughly 47% of all U.S.-listed retail volume, according to its own data. That could pose competition issues, said Gensler.

"Market concentration can deter healthy competition and limit innovation. It also can increase potential system-wide risks, should any single incumbent with significant size or market share fail," he said.

Gensler's planned review would see the new chair wade into the fraught issue of off-exchange trading and whether these so-called dark pools are distorting the overall price discovery mechanism, a question the SEC has grappled with in the past.

With nearly half of trading happening away from traditional exchanges or "lit markets," the national mechanism for establishing the best price for a stock, also known as the "national best bid and offer," may have been distorted, he said.

That migration to off-exchange markets has been driven in part by market-makers' ability to offer fractional sub-penny price improvement on bids and offers, whereas exchanges have to trade in pennies -- creating an unleveled playing field, he said.

"The current market structure has created a limited set of middlemen through whom a significant amount of volume flows," said Steve Sosnick, Chief Strategist at Interactive Brokers.

"It is not clear to Mr. Gensler that the evolution has all been favorable to investors." (Reporting by Katanga Johnson in Washington and John McCrank in New York Additional reporting by Saqib Iqbal Ahmed in New York Editing by Michelle Price, Chizu Nomiyama, Howard Goller and Diane Craft)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
GAMESTOP CORP. -4.37% 213.82 Delayed Quote.1,034.93%
INTERACTIVE BROKERS GROUP, INC. -2.68% 63.26 Delayed Quote.3.84%
PIPER SANDLER COMPANIES -1.66% 124.14 Delayed Quote.23.03%
06/18INTERACTIVE BROKERSá : Significant Insider Selling in Shares of Interactive Brok..
06/17INSIDER TRENDS : Insider Sales Add to 90-Day Trend at Interactive Brokers Group
06/16INTERACTIVE BROKERSá : Insider Sale at Interactive Brokers Group (IBKR) Continue..
06/15INSIDER TRENDS : Selling By Insiders Lingers at Interactive Brokers Group
06/14INTERACTIVE BROKERSá : Significant Insider Selling in Shares of Interactive Brok..
06/11INSIDER TRENDS : Insider Sales Continue 90-Day Trend at Interactive Brokers Grou..
06/10INTERACTIVE BROKERSá : Continued Level of Significant Insider Selling at Interac..
06/09U.S. SEC chair signals sweeping review of exchange, broker rules
06/09INSIDER TRENDS : Insider 90-Day Selling Trend Continued at Interactive Brokers G..
06/09SEC Proposes Broad Review of Stock Trading Rules
More news
Financials (USD)
Sales 2021 2 757 M - -
Net income 2021 310 M - -
Net Debt 2021 - - -
P/E ratio 2021 19,7x
Yield 2021 0,63%
Capitalization 5 745 M 5 745 M -
Capi. / Sales 2021 2,08x
Capi. / Sales 2022 2,12x
Nbr of Employees 2 187
Free-Float 80,8%
Duration : Period :
Interactive Brokers Group, Inc. Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends INTERACTIVE BROKERS GROUP, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 7
Average target price 87,71 $
Last Close Price 63,26 $
Spread / Highest target 73,9%
Spread / Average Target 38,7%
Spread / Lowest Target 13,8%
EPS Revisions
Managers and Directors
Milan Galik President, Chief Executive Officer & Director
Paul Jonathan Brody CFO, Secretary, Treasurer & Director
Thomas Pechy Peterffy Chairman
Thomas A. Frank Chief Information Officer & Executive VP
Lawrence E. Harris Lead Independent Director
Sector and Competitors