The United States’ Securities and Exchange Commission (SEC), the federal markets anti-manipulations agency, will be integrating new capital market rules. This order has apparently come directly from Chairperson Gary Gensler, with the goal of guaranteeing a fair market competition between brokers and exchanges.
During a virtual conference organized by Piper Sandler Gensler disclosed that his agency aims to make fair equities and to motivate market participants to embrace new market models. He also wishes to set ground rules for the “best execution” and “national best bid and offer” modelsm especially for the controversial “payment-for-order-flow” system.
The payment-for-order-flow strategy strategy became a subject of controversy during the Robinhood fiasco we saw earlier this year. Robinhood uses this model, according to which market orders are rerouted to private trading platforms in return for fees, leading to charge-free trading services. Sometimes that model, unfortunately, leads to conflict of interest, like when a broker sends the market order to a given private platform offering the best fees but not the best execution for traders.
Robinhood got penalized with 65 million US dollars for concealing its payment-for-order-flow strategy and not offering what is best for users but the company continues to use the same model.
Do you think these changes would prevent such messes from happening in the future? I hope so but I am a little sceptical.
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They say there is no such thing as a free lunch. Over a few decades, banks have paid massive fines for breaking laws, but that has not stopped them continuing to rig markets. I recently used on of those compare markets internet services for home utilities, and found the following omissions:
1 The site did not ask if customer valued source of energy for each provider - renewable or otherwise. That is my first criteria because historically I have paid carbon offsets for our family consumption, and found it far cheaper to use a 100% renewable supplier for gas and electricity
2 The site went out of their way to conceal the “pence per kWh” cost, when fixed or “standing” costs are less than 10% of the bill.
3 The site concluded that I would save over £500 per year, but were using my current supplier’s FUTURE cost not yet being applied, against their cost which runs till the end of August.
In summary, the use of this service was a waste of time for me, but I bother to calculate the total cost of ownership instead of a headline “this will save you £500 per year” which was not going to be the case.
The issue I have with such services, and I use this as a simple comparison that most traders will understand, is that you wonder to whose benefits such new market rules are intended. Is it really for the retail traders, as news channels will propose it, or is it an attempt at yet more and more obscure rules that are said to do one thing but achieve something else instead (whether by design or lack of detailed work to seek out how a new provider may work the system to their benefit)?
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I honestly am not sure which it is, which is why I feel so sceptical there will be any change for the end user.
This is my logical approach to this and to any such “news”.
Can I make any choices or decisions in my life that will affect the outcome of this?
NO.
I have a tool in my strategy called ELIMINATION. Courtesy of VP from NNFX and (I think) from Jocko Willink in his book Discipline Equals Freedom. I have started to consciously apply this to my life in terms of what is the best course of action. This aligns with my programme management training and is akin to the first option when starting an options analysis. The first and most important option is DO NOTHING.
Many people forget there is a DO NOTHING option. It can avoid you chasing down the garden path to the rathole, ending up in Alice in Wonderland. Or as I like to say “when you are up to your ass in alligators it is difficult to remember that the objective was to drain the swamp”.
Worry about those matters that you CAN act upon to make a change in your life and forget those matters that you cannot influence or change by your actions. It will be a far more peaceful existence.
P.S. Just because you are NOT paranoid, it doesn’t mean that they are NOT all out to get you. 
Or as my son just said “when they are out to get you, paranoia is just good thinking”
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