SEC says brokers enticed by payment for order flow are making trading into a game to lure investors

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  • Wall Street’s main regulator released its highly anticipated report on the GameStop mania on Monday.
  • The SEC said online brokerages, enticed to increase revenue through payment for order flow, are turning stock-trading into a game in order to encourage activity from retail investors.
  • “Payment for order flow and the incentives it creates may cause broker-dealers to find novel ways to increase customer trading, including through the use of digital engagement practices,” the agency said.
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The Securities and Exchange Commission said online brokerages, enticed to increase revenue through the controversial industry practice of payment for order flow, are turning stock-trading into a game in order to encourage activity from retail investors.

Wall Street’s main regulator on Monday released its highly anticipated report on the GameStop mania earlier this year. The 44-page report detailed how the trading frenzy went down and raised red flags on a number of issues, including the back-end payments that brokerages receive, gamification of trading, as well as disclosures on short sales. But it stopped short of laying blame on a single cause or entity.

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www.cnbc.com/2021/10/18/sec-says-brokers-enticed-by-payment-for-order-flow-are-making-trading-into-a-game-to-lure-investors.html

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