The United States Securities and Exchange Commission or SEC has published a 45-page report explaining the phenomenon that occurred at the beginning of years and called gamification from the investment by platforms like Robinhood according Brian Cheung en Yahoo Finance.
The report does not offer specific policy recommendations about the frenzy experienced at the beginning of years, but if you leave the door open to a “Additional consideration” about the “Digital participation practices” that certain investment houses use to encourage risk investments.
Robinhood and GameStop is a case of it.
These practices may be encouraged by the industrial model of payment per order flow, where brokers route orders through wholesale market makers. The President of the SEC, Gary Gensler, has not ruled out the possibility of a total ban on the model.
Robinhood defended itself in this regard and pointed out that “there is no evidence” that payment for order flow or gamification were to blame for the events of January 28.
“We look forward to continuing to work with the SEC to ensure that the markets remain accessible and affordable for all,” added a Robinhood spokesperson.
The report also suggested better disclosures about short positions to better monitor unusual price dynamics, as well as shorter settlement cycles that could reduce the likelihood of brokers having to impose controversial trade restrictions.
The SEC emphasized that its job is guarantee fair, orderly and efficient markets, do not eliminate price volatility.
“People may disagree on the prospects for GameStop and the other meme actions, but those disagreements are the ones that should lead to price discovery rather than disruption, “the report reads.
