Robinhood surges 9% as SEC dumps plan to limit PFOF deals

Robinhood shares soared at the open on Thursday following news that the U.S. Securities and Exchange Commission (SEC) won’t limit it in making payment-for-order-flow (PFOF) deals.

The stock rose sharply following a report from Bloomberg saying the SEC won’t limit Wall Street firm’s making payment-for-order-flow deals.

The payment-for-order-flow system is a major part of firms such as Robinhood and Charles Schwab’s business models.

This system allows Robinhood to offer commission-free trading.

This system has been criticized for routing orders through a handful of large electronic trading firms that are paying the broker, and not giving retail traders the best price.

Robinhood previously settled with the SEC for $65 million over its failure to disclose its PFOF activity.

SEC chair Gary Gensler had proposed an auction system to replace PFOF.

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