Robinhood’s chief legal officer stated the payment brokerages get for directing trades to market makers is a benefit to retail investors, according to a report by CNBC on Monday.
- Robinhood’s Dan Gallagher indicated that the Securities and Exchange Commission is “going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors.”
- Payment for order flow is one of Robinhood’s largest revenue sources and the way the stock trading app is able to offer zero-commission trading. Payment for order flow is a highly contested practice that has gained attention from regulators.
- Gallagher further noted that banning payment for order flow “is on the table.” At Robinhood, the payment for order flow is the life blood of a no commission, no minimum balance brokerage.
After an epic short squeeze in GameStop’s stock in January that pushed Robinhood to limit trading on securities, Robinhood CEO testified to the U.S. House Financial Services Committee in February and legislators criticized payment for order flow for conflict with market markers. HOOD down -2.99%