GameStop Mania Drives Scrutiny of Payments to Online Brokers
Posted on AllSides February 4th, 2021
From The Center
The Reddit-fueled frenzy in stocks such as GameStop Corp. GME -11.54% and AMC Entertainment Holdings Inc. AMC -7.47% is prompting calls for regulators to reconsider a decades-old practice in the U.S. stock market: payment for order flow.
The practice, in which high-speed trading firms pay brokerages for the right to execute orders submitted by mom-and-pop investors, has long been controversial. Some say it warps the incentives of brokers and encourages them to maximize their revenue at the expense of customers. Supporters, including many brokers and trading firms, say it is...
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