The Battle of Paid and Zero Commission Trading Continues

September 14, 2021

Mish's Daily

By Mish Schneider

Written by Forrest Crist-Ruiz

Tuesday, the chairman of the Securities Exchange Commission Gary Gensler faced pushed back from senators about his recent ideas of adding cryptocurrency regulation along with other topics such as meme stocks, and zero trading commissions.

Specifically diving into zero-commission trading, Gensler believes that zero fees while nice for the retail investor also hurt the traders who use them as their transaction data is being sold to market makers/companies who match buy and sell orders.

In theory, these market makers can front-run orders for very small profits. These profits can add up quickly partly from the vast amount of retail traders and from high frequency trading.

On the other side, an argument can be made that people have the right to choose between zero commissions and paying a small premium to hide their order flow.

Pat Toomey, Senator of Pennsylvania questioned Gensler on the need to restrict access to order flow since buy and sell orders are closely matched showing that the market is providing a highly efficient place to execute trades for both retail and institutional investors.

While both sides have valid points, the market can easily exist with both trading fee structures.

What continues to lack is a clear upfront policy from companies showing how their customer's data is used or profited from.

With that said, Gensler’s approach could add more regulation to what market makers can buy in the form of data.

This might not be the right approach as it further complicates the matter and could take away free trading.

Furthermore, though retail traders would rather not have their order flow tracked, many traders prefer the zero-fee option compared to paying a small price.


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ETF Summary

S&P 500 (SPY) 441 support.

Russell 2000 (IWM) Next support area the 200-DMA at 218.07.

Dow (DIA) Could not hold over 347.31 support level.

Nasdaq (QQQ) 368-370 next support area.

KRE (Regional Banks) 62.59 support from 8/19.

SMH (Semiconductors) Also holding over the 10-DMA at 271.88.

IYT (Transportation) Clean break of the 200-DMA at 248.49

IBB (Biotechnology) 168.25 support from the 50-DMA.

XRT (Retail) 91.49 support area to hold.

Junk Bonds (JNK) Watching to hold the 50-DMA at 109.50. Resistance 110.10.

IYR (Real Estate) Held the 50-DMA at 106.75. Main support at 105.24.

XLP (Consumer Staples) 71.29 support.

GLD (Gold Trust) Looking good. Next it needs to clear the 200-DMA at 169.36.

SLV (Silver) Key support 21.20.

XME (S&P Metals and Mining) Trades very choppy.

USO (US Oil Fund) Needs to hold over 49.00.

TLT (iShares 20+ Year Treasuries) 150.81 new minor support level.

USD (Dollar) 91.95 support. 92.89 resistance.

DBA (Agriculture) Like 18.47 as new support.

VBK (Small Cap Growth ETF) 285 next support area.

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