If we’re being honest they probably should be banned. That being said we already saw the massive hood crash the last time a potential market maker ban was considered. It feels like this should be a big underlying issue as selling orders is about 55% of their revenue (q2 numbers). I don’t see a future where Robinhood ceases to exist as they already have a massive customer base, but a 50% revenue drop would murder stock prices.
Why is the potential ban of pfof firms no longer a major concern for $hood?
byu/MentalCaptain7033 ininvesting
Posted by MentalCaptain7033
2 Comments
Good question. A lot of the fear has eased because regulators haven’t pushed the ban further, and Robinhood has been working on other revenue streams like Gold subscriptions, interest on cash, and crypto trading. It might help to track how fast those areas grow compared to PFOF. Watching their earnings calls or 10-Qs could give a clearer view of how dependent they still are.
Because they wont have to worry about it for at least 3 years in the US, and the EU isn’t as big a market for them.
From in 2024 we had 14 proposed regulations that would tighten best execution requirements, eliminate PFOF, force disclosures for dark pools, create trading venue mandates, etc.
The Trump admin scrapped all of then. Reducing consumer protections has been a tent pole to the administration.
To re-open proposed regs and push them through would likely take 2+ years after he leaves office assuming there is an admin that wants to do it.