In the Press
December 16, 2022

Promised SEC Reforms Could Upend App-Based Trading (Law360)


The U.S. Securities and Exchange Commission proposed rules this week that could threaten a key revenue source for popular smartphone trading applications like Robinhood and potentially change the way everyday Americans interact with the stock market. The best execution proposal could have a more direct impact on retail investors than the other three proposals up for consideration, Financial Industry partner Nick Losurdo told Law360. That's because the language in the nearly 450-page proposal targets a practice known as payment for order flow, which has been credited as allowing brokers to offer commission-free trading by passing their customers' trades through a third party, from which the brokers collect a fee. Losurdo, who counsels broker-dealers on SEC regulations, said PFOF "allows retail broker-dealers to offer a lot of things to their retail customers. Everybody trades for free. Essentially, retail has access to really robust and significant research reports for free, real time quotes."