SEC's proposed rules hit Robinhood and Virtu stocks

Shares of companies that earn revenue via payment-for-order-flow fell on Wednesday after the SEC got one step closer to enacting rules to that the agency believes levels the playing field for retail investors.

Why it matters: The PFOF proposal, among the more significant shakeups for Wall Street in decades, would cut into the revenues of market makers like Citadel Securities and Virtu Financial, as well as brokers like Charles Schwab and Robinhood.

Details: Under the rules, some orders that may have gone to wholesalers would be sent instead to auction, a move that SEC Commissioner Gary Gensler argues could save retail traders as much as $1.5 billion a year.

Meanwhile: Another rule proposed by the SEC would allow exchanges to display sub-penny price moves. Currently, exchanges are only allowed to show that figure in one-cent increments — a policy believed to benefit larger investors over small.

Of note: The public comment period for the proposed rules was extended into March 2023, and complete approval will take even longer.