EU Set To Ban Trading Practice Helping Power Meme-Stock Mania

The European Commission is planning to ban payment for order flow, paralleling potential U.S. moves to stem a practice that hit the headlines during the meme-stock mania. From a report: A forthcoming review of the Markets in Financial Instruments Directive will include a ban amid other measures to increase transparency, such as a consolidated tape of information about transactions, people familiar with the matter said. The U.S. Securities and Exchange Commission is separately weighing a ban on payment for order flow, in which trading firms pay retail brokerages to execute their trades. Regulators are concerned that video-game like prompts have encouraged excessive trading on app-based brokerages that fueled a explosive surge in value for GameStop Corp. and other stocks this year. While the day-trading frenzy is far more muted in Europe than the U.S., the practice of zero-commission trading is starting to cross the Atlantic. That prompted the bloc's markets watchdog to warn firms and investors in July of the risks arising from payment for order flow.

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