London Daily

Focus on the big picture.
Wednesday, Nov 04, 2026

Biden's Wall Street cop is putting Robinhood on notice

Biden's Wall Street cop is putting Robinhood on notice

Gary Gensler, the newly installed chairman of the Securities and Exchange Commission, put Robinhood and Citadel Securities on notice Thursday about a potential crackdown in the Biden era.

Gensler, whose nomination was endorsed by Senator Elizabeth Warren, repeatedly expressed concern about the "inherent" conflicts of interest that exist in the payment-for-order flow business model used by Robinhood and other brokerages that don't charge commissions.

"These are not free apps. They are just zero-commission apps. The cost is inside the order execution," Gensler told lawmakers during the latest congressional hearing investigating the GameStop saga.

The controversial trading restrictions imposed by Robinhood earlier this year drew attention to how some brokerages receive revenue in exchange for routing orders to high-speed trading firms like Citadel Securities.

Gensler, who was known as the toughest regulator of the Obama era, promised to "take a closer look" at payment for order flow and noted that both Canada and the United Kingdom banned the practice. He also pointed out that not all zero-commission trading apps use the business model.

Robinhood and others in the industry argue zero-commission trading has created huge savings for individual investors and opened up trading to the masses.

Yet critics worry that it's really the big Wall Street players that are winning out. Gensler's comments suggest he sympathizes with that concern.

"There are costs. It's like an iceberg: Most of the iceberg is below the surface," the SEC chief said. "The costs are below the surface."

'Dominant' position held by Citadel Securities


Gensler also pledged to look into concerns about the broader structure of the modern stock market, including the "dominant" position held by Citadel Securities, the market maker owned by billionaire Ken Griffin.

The SEC chairman specifically called out the fact that Citadel Securities executes a staggering 47% of all retail trade volume. The Chicago firm is the biggest source of revenue for Robinhood.

"Concentration could lead to more fragile markets, meaning less orderly, and also more costly or less efficient, markets. That's what history and economics tell us when we get concentration," Gensler said.

Moreover, Gensler signaled concern about the information Citadel Securities holds due to its dominant position.

"There is one online search engine in America that most of us go to. That firm has data advantages," he said. "Now, in the middle of our capital markets, one firm in the retail order flow may have growing data advantages over other market participants."

Isaac Boltansky, director of policy research at Compass Point Research & Trading, said the talk about market concentration "will be a concern for Citadel" going forward.

"The dial was turned one peg louder on the concentration issue," Boltansky said in an email.

Citadel Securities has previously suggested it doesn't care about the fate of payment for order flow.

"We simply play by the rules of the road," Griffin said during a February hearing on GameStop. "If they choose to change the rules of the road, we need to drive on the left side versus the right side, that's fine with us."

A Citadel Securities spokesperson declined to comment.

Game-like features in trading


Like other regulators, Gensler expressed unease over the embedding of game-like features into trading apps to increase customer engagement. He asked SEC staff to look into these issues.

Regulators in Massachusetts have accused Robinhood of using images of confetti and other techniques to "entice and induce inexperienced customers into risky trading." Massachusetts is seeking to revoke Robinhood's broker-dealer license in the state — a move the startup fiercely opposes. Robinhood has
recently ended its practice of using confetti to celebrate first trades and other milestones.

Gensler noted that this so-called gamification is not exclusive to trading apps, though the stakes are higher.

"The streaming apps figured out a long time ago that I'm kind of a rom-com guy," said Gensler. "You thought I was a thriller guy, but it's rom-com. If I lose an hour and a half and it was a lousy rom-com, alright."

Yet gamification in trading can have more significant effects on investors' finances, Gensler argued.

Robinhood's representatives were not immediately available to comment on the hearing.

The trading app has repeatedly defended itself by pointing to how its platform allowed countless new investors to participate in financial markets.

"We look forward to engaging with the SEC as they consider matters involving retail investors and market structure," Robinhood said in a statement. "To the extent the SEC decides that regulatory changes may be necessary, we intend to participate through the public notice and comment rulemaking process."

Despite the increased scrutiny, Robinhood continues to enjoy explosive user growth, especially in cryptocurrencies. The startup confidentially filed to go public in March, setting the stage for a highly anticipated IPO.

Newsletter

Related Articles

0:00
0:00
Close
Department for Energy Security and Net Zero Approves Construction of New North Sea Offshore Wind Hub
Northern Ireland Executive Finalizes Public Sector Pay Agreements Following Months of Inter-Agency Negotiations
Welsh First Minister Eluned Morgan Secures Cross-Party Support for Regional Clean Energy Infrastructure Bill
Competition and Markets Authority Launches Formal Investigation Into Dominant Artificial Intelligence Cloud Partnerships
United Kingdom Foreign Secretary David Lammy Concludes High-Level Diplomatic Mission to Washington and Ottawa
Scottish Government Announces Emergency Housing Investment Package to Address Escalating Urban Homelessness
Chancellor Rachel Reeves Finalizes Corporate Tax Adjustments Ahead of Upcoming Business Investment Summit
National Health Service England Unveils Emergency Winter Resilience Plan to Combat Projected A&E Overcrowding
Bank of England Monetary Policy Committee Votes to Hold Base Interest Rate Steady at Four Point Seven5 Per Cent
UK Gross Domestic Product Expands by Zero Point Four Per Cent in Third Quarter Driven by Resilient Services Growth
Northern Ireland Executive Agrees on Multi-Year Public Sector Pay Restructuring Framework at Stormont
Department for Transport Confirms Acceleration of Electric Vehicle Charging Infrastructure Rollout Along Strategic Motorways
Welsh Government Announces Emergency Funding Package to Support Agricultural Sector Facing Severe Weather Impacts
High Court Rules in Favor of Environmental Coalition Over Government Carbon Reduction Plan Deficiencies
Office for National Statistics Reports Stable Retail Sales Growth Supported by Strong Digital Commerce Volumes
Scottish First Minister John Swinney Secures Cross-Party Support for Renewable Energy Export Expansion
National Health Service Digital Reports Major Breakthrough in Reducing Elective Waiting Lists Across England
Chancellor Rachel Reeves Outlines Infrastructure Spending Reforms to Boost Regional Economic Growth Across Northern England
Bank of England Holds Baseline Interest Rate at Five Percent Amid Persistent Core Inflation Pressures
House of Lords Advances Representation of the People Bill to Modernize Electoral Law Ahead of General Election
Financial Markets and Private Equity Assess Tax and Corporate Realignment Following Recent Chancellor Budget Adjustments
Justice Committee Warns Legal Aid Is a Service in Managed Decline Due to Inadequate Government Funding Responses
Royal Navy Intercepts Russian Intelligence Vessel and Warships Across Intensive North Sea Operations
Business and Trade Committee Slams Government Policy on China as Fragmented and Lacking Strategic Direction
Home Secretary Shabana Mahmood Softens Immigration Plans Following Intensive Cabinet Backlash Over Settlement Timelines
Automotive Industry Data Reveals Continued Acceleration in Battery Electric Vehicle Registrations Across British Dealerships
High Court of England and Wales Rules on Landmark Legal Challenge Regarding Local Government Housing Mandates
Department for Energy Security and Net Zero Approves Expanded Offshore Wind Infrastructure Along Scottish Coastline
Competition and Markets Authority Launches Broad Investigation Into Artificial Intelligence Infrastructure and Cloud Partnerships
United Kingdom and European Union Launch High-Level Preparations for Bilateral Defense and Security Summit in Brussels
National Health Service England Unveils Emergency Workforce Reforms to Alleviate Winter Accident and Emergency Pressures
Chancellor Rachel Reeves Finalizes Autumn Budget Adjustments to Meet Fiscal Rules and Fund Public Services
Bank of England Prepares for Interest Rate Decision Amid Rising Bond Yields and Inflationary Pressures
House of Lords Begins Detailed Legislative Scrutiny of Representation of the People Bill and Cyber Security Laws
Metropolitan Police Detain More Than Three Hundred Individuals Following Large-Scale Demonstration Outside London Embassy
Home Office Prepares Stricter Residency Rules Requiring Vulnerable Migrants to Wait Decade for Settlement Rights
Professional Mental Health Bodies Demand Statutory Regulation for Counsellors and Psychotherapists
National Grid Confirms Construction of Britain's Largest Electrical Substation to Power Teesside Data Centre
Prime Minister Keir Starmer Travels to Samoa for Commonwealth Summit Amid Debates on Economic Cooperation and Reparations
Home Office Implements Enhanced Digital Border Controls and Visa Processing Systems at Major Airports
Office for National Statistics Reports Stable Employment Participation Rates Across Regional Labor Markets
Department for Business and Trade Announces Strategic Partnership to Secure Critical Mineral Supply Chains
Scottish Government Unveils Regional Economic Development Strategy to Boost Advanced Manufacturing in Glasgow and Dundee
Treasury Officials Review Taxation Frameworks and Capital Gains Rules Ahead of Autumn Budget Disclosures
National Health Service Leaders Warn of Winter Capacity Pressures Across Acute Care Facilities
Bank of England Prepares for Key Interest Rate Decision Amid Sticky Inflation and Fiscal Policy Pressures
Home Office Expands Border Security Operations and Intelligence Sharing With European Partners
Office for National Statistics Reports Modest Retail Sales Growth Ahead of Crucial Christmas Trading Season
Welsh Government Unveils Strategic Plan to Boost Regional Technology Innovation and Digital Skills Training
Department for Environment Food and Rural Affairs Implements New Agricultural Subsidies Framework for English Farmers
×