The Securities and Exchange Commission’s Annual Regulatory Agenda, released last month, includes an initiative to modernize rules regarding “payment for order flow,
best execution (amendments to Rule 605), market concentration, and certain other practices.” These issues have come under additional scrutiny during the Covid-19
pandemic, as a surge in retail trading has sent off-exchange market share soaring (see chart below). And they became a legislative and regulatory priority with the
extraordinary volatility seen in retail-favored “meme stocks” since January, leading to a spate of congressional hearings targeting the off-board internalization of retail orders.