Welcome back to the channel everyone today, i want to talk about another senator being paid off and raising a proposal to not ban payment for order flow. I also want to talk about why it was already going to be tough for gary gensler to ban payment for order flow even before the proposal so stay tuned and let's make some money. So senator pat toomey's proposal is a blocking of the payment for order flow ban. The bill would prevent the sec from banning on payment for order flow, because it's a key revenue source for robin hood and other brokerage firms.

But don't forget this is just a proposal. So it still needs to be voted on and the comments heard. Therefore, it's obviously not a guarantee, and i do still think and hope the payment for order flow will be banned. So toomey defended the practice for helping develop new investment, apps low-cost trading and more efficient execution.

But we also know that low-cost trading can be given without payment for order flow, because there's many brokers in the uk and elsewhere in europe. That do exactly that, and we also know that payment for order flow doesn't encourage efficient execution. In fact, it encourages quite the opposite, because there's a conflict of interest, so senator pat toomey will, on thursday introduce legislation to protect a controversial practice known as payment for order flow. The main source of revenues for online brokerages, like robin hoods sec chairman gary gensler wall, street's top regulator and a critic of the practice, has made reforming payment for order flow a top priority after the trading frenzy in stocks such as gamestop earlier this year, specifically toomey's Bill would prevent the sec from issuing an outright ban on payment for order flow, and he said new innovations such as zero commission trading and user-friendly mobile apps have allowed more americans to participate in the stock market than ever before.

I do agree that user-friendly apps has made it easier to invest in the stock market. You don't have to go down to your local stock broker to purchase some stocks anymore. You don't have to give them a call on the mobile phone and wait half an hour while you go through personal details to buy some stocks, but a user-friendly platform and payment for order flow aren't mutually exclusive. You don't have to use payment for order flow to have a trading app again, there's many in the uk and in europe.

The work, absolutely fine without payment for order flow. Also mumma are currently running a massive new promotion. There's three free stocks: one stock valued up to 350, one with a guaranteed value of at least 54. and a third free stock neo with a guaranteed value of 40.

On top of all of that, just for signing up and depositing at least a hundred dollars with mumi, you also get free, real-time level, 2 market data to be able to execute the best trades. You also get advanced charting tools and, most importantly for me, you also get 24 7, real-time financial news so that you don't miss any key headlines or key news announcements, and he also said those zero commission stock trades help robin hood persuade millions of younger customers to Invest for the first time and are credited for broader market participation across the us, but i think it's also important to remember that 87 of stocks are held and traded by the wealthiest 10 of americans and therefore the majority of trading volume that goes on on exchanges Is performed and most definitely can be performed by people that probably wouldn't mind paying a five dollar commission per trade or paying a ten dollar a month monthly fee for people that can't afford a ten dollar a month, monthly fee or a five dollar commission per trade. Probably aren't contributing too much to the total volume on the exchanges. It says, though, the payment for order flow practice has outsized implications for robin hood in a government filing published in july.

Robin hood said 81 of its first quarter. Revenues came from payment for order flow. Now this is where the massive conflict of interest comes from. Robin hood obviously drive 81 of their revenues from payment for order flow and therefore they're going to do anything they can to get the most amount of money and they aren't going to want to sacrifice that money that they make, because it's basically all of their revenue.

Let's compare this in a weird way to the accounting world: an accounting firm can't accept a job that would be over five percent of their annual revenue because it creates a conflict of interest and it's unethical, because you basically do anything you can to get that five Percent revenues, or even more basically as an accountant, we can't be biased if it represents five percent or more of our annual revenue and therefore we're simply not allowed to take those kind of jobs on. Interestingly, it does say the sec have reviewed the practice several times before and has thus far agreed with brokers and traders that it benefits small investors, a principal concern for sec chief gensler. Now i think it also helps that there's a lot more awareness of what actually goes on in the market nowadays as well. Maybe last year we would have said that robin hood is absolutely great, because cheap, investing or free investing is good, but it's because we were unaware of what truly goes on with payment for order flow and how it creates this massive conflict of interest.

I think last year, if we knew that robin hood was selling their order flow to citadel, so they could route it through the dark pool or off exchange venues. I don't really think we'd be all too happy about payment for order flow like we are now and as gary touches on he says, still nearly half of the volume transacted is executed in dark pools or by wholesalers. He added, i believe, it's appropriate to look at ways to freshen up the sec's rules, to ensure that our equity markets reflect our mission and are as efficient and competitive as they could be, and fortunately it does also say here outside the sec's analysis, the odds toomey's Bill becomes law anytime soon appears slim in a congress controlled by the democrats. Ginsler nominated to lead the sec by president joe biden has been encouraged by progressive lawmakers to step up regulatory oversight and therefore, in a democrat-controlled congress, it's very unlikely that toomey's bill could pass because they are trying to increase regulatory oversight.

Furthermore, with democrats intent on enacting trillions in spending facing a looming debt ceiling and poised to review a slate of new federal reserve nominees, it's unclear whether the senate could consider the legislation before year's end, because obviously the senate is so busy at the moment and has Many more important fish to fry, such as the looming debt crisis before they start looking at payment for order flow now, obviously, senator pat toomey has been paid off for only 1.2 million dollars. You too can buy a congressman to work against the common man. The records don't lie to me: you're, a traitor to the american people. Toomey's campaign contributors are listed below in this link here.

The second largest personal contributor, being the dtcc number 5, 8, 16 and 20, are also very interesting and merit. Further investigation teams received 1.2 million dollars in above board donations between securities and investment groups, retirement funds, large banks and more now. Obviously, this isn't quite speaking, fees paid directly to somebody like jeanette yellen. This is just fees that have been donated to his political campaign to help fund his campaign and his race.

I personally think it's also a massive conflict of interest. How much money these senators and congressmen do accept from large institutions and large banks, whether they accept these fees to fund their political campaigns or whether they accept these fees as speaking fees, either way? It's a massive massive conflict of interest. It effectively just encourages them and just truly pays them off to say whatever they want to say. As long as it's positive and a good outcome for those big banks and institutions that paid them all the money, i personally think there should be a ruling on how much money, senators and congressmen can accept from institutions like banks or just from anyone when funding their Political campaigns or accepting in speaking fees, because at the end of the day, if you're attending a conference, it's fine for somebody to pay your petrol costs, maybe pay your hotel costs.

Maybe give you a bit of money for it to be financially worth it for you, but i think eight hundred thousand dollars for a quick two minute speech is just unnecessary and now i also want to talk about why it could be tough for the sec to Ban payment for order flow gary said: i've really said to staff look payment for order flow and what we do with that. Whatever restrictions is on the table, but we're also looking at things that are within the market structure itself as well, but university of notre dame associate law school. Professor patrick corrigan told yahoo finance that at a minimum, regulators do have the tools to limit payment for order flow. Those regulators do include the sec and finra or the financial industry regulatory authority.

However, he described the question of whether the sec can outright ban the practice altogether. As a legal gray area. He said the authority here is not clear cut. He said, there's a reason why the sec has not banned payment for order flow in the many decades.

The practice has existed, the anti-fraud and disclosure statutes that form the basis of the sec's authority. Don't support it. Prohibiting a fully informed customer, who is assured of best execution from electing to execute free trades through a broker who receives payment, fraud or flow, would also go against the surge in democratizing access to securities markets. I guess the key points here that gary gensler is focusing on is both prohibiting a fully informed customer, whether robinhood customers are fully informed or whether they've been gamified and also who is assured of best execution.

While they are assured of best execution, they're, definitely not receiving best execution, because obviously there's a massive difference between just assuring somebody that they're getting something and actually giving it to them. He said one specific regulation the sec could use to at least argue for a ban is regulation, best interest under the rule broker. Dealers like robin hood and those with similar services, have a duty to provide the best trade execution for their orders. There is a question as to whether this payment for order flow practice creates conflicts of interest in meeting the duty of best execution.

But he also says that that argument isn't perfectly fit for supporting a ban because it applies only when broker dealers are providing personalized investment advice about securities to retail customers and because robin hood aren't necessarily advising you to buy specific securities. He thinks they don't necessarily fall into this rule critically. The sec couldn't just ban payment fraud or flow outright under that authority, unless perhaps it could characterize the platforms as those making investment recommendations. Potentially, you could argue that robin hood did make a recommendation because they did encourage customers to invest in their robin hood ipo, but i think it could be quite hard to apply that regulation to other trading platforms out there, like td ameritrade, for example.

The article goes on to explain some other difficulties and some other avenues that the sec could try, but it basically explains that it's not quite as clear-cut as gary gensler, just turning around and saying payment for order flow it's banned now. I also wanted to show you this interview. I didn't really want to play the full interview, because it's about six minutes long, but basically the interviewer talks about china, planting 85 000 bombs to destroy all of these unfinished properties. I find this really interesting.

For a few reasons, i think if the properties were going to be finished and if these property developers weren't in any real serious trouble, they would have left the buildings where they were and not destroyed them. But i think, because these property developers are in serious trouble - and they know these properties aren't going to be finished for 5 10 15 20 years, they basically decided it was easier and cheaper just to destroy all of them. Now you may also see that headline down the bottom saying: is china covering up a financial crisis? I think this is a really really interesting point to consider. Why would they be trying to cover it up, though, and it's because evergrande actually owes money to 171 different financial institutions in china alone and owes money to another 121 financial institutions elsewhere around the world like in the us.

So clearly, they are in a lot of trouble owing a lot more money than china is currently letting on. The interview also then goes on to talk about china potentially covering up the financial crisis and how they're doing it? How they're censoring customers, they're censoring investors and they're even censoring employees from making statements on social media similar to how they did with the pandemic. Guys be sure to, let me know down in the comments below what you think about another senator being paid off and trying to stop the sec from banning payment for order flow and, as always guys if you enjoyed this video, be sure to check out some of My others, alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted. When i upload a new video cheers.