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Should the SEC Ban Payment for Order Flow? — SEC Roundup

by Nick Morgan and Tom Zaccaro

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Welcome to SEC Roundup, a bi-monthly video series by Paul Hastings partners and former Securities and Exchange Commission Senior Trial Counsels Nick Morgan and Tom Zaccaro exploring current SEC topics with thought leaders and industry experts.

The SEC’s proposed rule, released Wednesday, shortening the standard settlement cycle from two business days after the trade date (T+2) to one business day after the trade date (T+1), addresses one of the factors the SEC staff identified as causing problems during the “meme stock” trading frenzy.

Listen in as Morgan and Zaccaro discuss with Bloomberg Opinion Columnist Nir Kaissar another issue meme stocks brought to the fore: payment for order flow.

SEC Chairman Gary Gensler has made his view clear that the agency should consider banning PFOF, raising significant questions.

“The SEC defense bar [is] anticipating some activity by the SEC in 2022 on the issue of payment for order flow,” Morgan says.

Nir shares his thoughts on the benefits and costs this might pose to investors and market movers, and offers alternatives to an outright ban that may serve a better purpose.

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