Chris Grisanti, chief equity strategist at MAI Capital Management, said regulators “may be trying to solve a problem that isn’t there.” However, he was skeptical that what Gensler laid out would actually result in the end of commission-free trading.
“Who’s going to want to be the first one to raise fees, and are others going to follow?” Grisanti said. Instead, brokers could try to hold onto their margins by adding fees elsewhere.
There are also retail brokerage firms seeking to gain a foothold in the market that see an opportunity in Gensler’s plans.
Kerim Derhalli, founder of the investing app Invstr which offers commission-free trading but says it doesn’t sell clients orders through payment-for-order-flow, asserts that the changes could bring more transparency. Even without paying brokerage fees for each transaction, ordinary traders still bear a cost, he says.
“Retail investors already understand they’re paying a price somewhere or other,” he said. “If the cost of buying and selling becomes more explicitly known, it might discourage people from thinking they’re Gordon Gekko,” Derhalli said, referring to the fictional character played by Michael Douglas in the 1987 film “Wall Street.”
This article was provided by Bloomberg News.