Welcome back to the channel everyone today, the sec is finally taking action. The us house committee on financial services is discussing some new rules today that were proposed on july. The 22nd trust me guys. You do not want to miss this video, so stay tuned and let's make some money, but before i dive into the video, i just want to give a massive shout out to the 2 700 of you that currently ding that notification bell, because you guys are always The first to watch a new video as soon as it's released so guys be sure to drop a like down below subscribe to the channel and ding that notification bell.

If you haven't already so you don't miss another video. Just like this one, and now i want to dive straight in with the key information so amendment in the nature of a substitute to hr 4617 or order flow improvement. Act. Summary this bill directs the sec to study and consider banning or limiting the payment for order flow in the form of exchange, rebates or payments from market centers to broker-dealers conflicts of interest based on pfof arrangements and the impact of pfof on the quality of order execution.

The bill also directs the sec to conduct rulemaking related to the full array of such payments fees, economic inducements and in-kind benefits made or assessed by brokers, exchanges and other market participants and the disclosure made to investors about such payments and fees. The bill also clarifies that the commission has the authority to regulate ban or such limit payments without waiting for the conclusion of the study. Background pfof refers to third parties paying brokerages in exchange for brokerages routing customer trade orders to the third parties for execution of the trade order. In december 2000, the sec conducted a special study payment for order flow and internalization in the options markets which concluded in perry.

In part that payment for order flow has had an impact on order, routing decisions, the sec also found that firms with policies to accept pfof tended to direct orders to specialists, who actually paid for pfof femmes with policies not to accept pfof directed orders to specialists, who Paid pfof less frequently, basically, firms that tend to accept payment for order flow tend to send their orders to companies that pay for order flow, even if they don't execute trades, as well as timely or for the best price firms that didn't accept payment for order flow. Obviously, routed their orders to the best market maker, not the one that was paying the highest price and not the one that was giving the worst deal earlier. This year, market disruptions relating to the trading of gamestop and other meme stocks drew a spotlight on online brokerage. Firm robin hood, which had earlier settled with the sec related to its use of pfof costing retail customers millions of dollars in inferior trade prices internationally pfof has been banned in canada and in the united kingdom.

This is great news that the u.s house committee is going to be discussing payment for order flow today, but we're not finished there. The u.s house committee are also discussing amendment in the nature of a substitute to hr 4619, to amend the securities exchange act of 1934 to prohibit trading ahead by market makers and for other purposes summary this bill would statutorily prohibit market makers from trading ahead or engaging In insider trading, it would also require the ceo of each market maker to annually certify that the ceo has performed reasonable due diligence during the reporting period to ensure the market maker has not engaged in the prohibited activities. This bill would hold the market makers ceo and the directors of the board personally liable for violating this prohibition. Trading ahead is a form of front running and insider trading.

When a broker trades ahead of a client, the broker is purchasing or selling securities for its own account with the inside information about a client order at a price that would satisfy the client's order. Trading ahead harms retail and institutional traders, because it makes the purchasing of securities more expensive or lowers the sale price of securities. This is something that was discussed in my most recent video and is also something that citadel knowingly performed by buying the order flow from those trading platforms and passing it through. The dark pool citadel have previously been fined many times over for trading ahead of customers when they receive those orders from those trading platforms and put it through the dark pool.

They obviously get to see what those orders actually are before, obviously placing the order. This enables citadel to trade ahead of their customers. They either take the other side of the trade or knowingly go into the market to purchase those shares at a lower price and then sell them to the users. On that trading platform, there was an article i went over maybe a week ago, where citadel were fined because in something like 400 out of 500 instances that traded ahead of their customers during poor's transactions.

This is absolutely something that has to be implemented and must be fixed as soon as possible to ensure that citadel cannot continue getting away with trading ahead of customers. This is one of the main problems. If citadel just continues the short ladder attack when the apes are buying more shares, then obviously the amc stock price is not going to go up and it's going to continue being manipulated downwards. Here's hr 4619 itself and the fine for individual violations is any associated person of a market maker who knowingly and willfully causes the market maker to violate paragraph one shall be fined in an amount equal to the greater of two times.

The amount of profit realized by such a violation or the greater fifty thousand dollars. They should also be fined an amount not in excess of two 200 of the compensation during the time period in which the violations occurred or in one to three year time period preceding the date on which the violations were discovered. Basically, someone could be fined two times their annual salary for up to three years, if not longer, for committing these violations, and finally, they can also be imprisoned for not more than five years. While this is still a fairly small fine, it does definitely deter people from doing it, especially lower level employees, as they could be fined six times their annual salary and in prison for up to five years.

But again, we're still not done there, because there's also amendment in the nature of a substitute to hr, 4618 short sale, transparency and market fairness act. Summary this bill would authorize the sec to revise the reporting period for 13f disclosures from quarterly to monthly and revise the time period to submit such reports expand the list of items to be disclosed to include certain derivatives direct the sec to complete rulemaking pursuant to section 929X of the dodd-frank act. It also changes the time period of 45 days after the end of that quarter to filing reports not later than 10 business days after the end of each month. That act requires aggregate short positions to be disclosed on form 13f and direct to the sec.

To study and report the use of confidential filing requests background in 1975 congress amended the exchange act to include a new section 13f to require certain institutional investment managers to provide quarterly reports to the sec regarding their holdings of certain equity securities. Such reports are reported quarterly and required to be filed 45 days after the close of a quarter now expected to be changing to monthly and 10 days after the end of each month. Such reporting was designed to provide more transparency to the markets about the positions and influence of institutional investors. Last year, the sec proposed raising the hundred million dollar reporting threshold for 13 f filings, which was met with widespread cross-industry criticism for its projected reduction in market transparency.

Volatility surrounding the trading of meme stocks like gamestop and the resulting short squeeze, it wasn't a short squeeze. It was just a gamma. Squeeze in january 2021 have elicited industry and advocacy support for increasing market transparency, including heightened 13f reporting requirements and short sale reporting. A full committee hearing entitled games stopped, who wins and who loses when short sellers, social media and retail investors collide on february 18, 2021 melvin, capital management, ceo, mr gabriel, plotkin testified that before the company closed its meme stock positions and incurred losses, his firm had been Short in gamestop since melvin's inception six years earlier, however, knowledge of such positions was not widespread until a few traders posted their analysis that melvin capital had held other such positions.

In the wake of the failure of the highly leveraged family office, it has been noted that archaeogus was able to increase its leverage by investing in equity, total return, swaps and contracts for differences, derivatives that institutional investors also use but which are not required to be disclosed. On form 13f, some have called for reforms in 13f filing requirements that would require institutional investment managers to report monthly, shorten the reporting time deadline and expand 13f reporting to include short stock sales, short options, positions and derivatives that mimic the behavior of stocks, such as total Return swaps such reforms it has been argued, would improve issuer stakeholder engagement on corporate governance issues and promote capital formation by enabling issuers to identify potential investors and attract new and long-term investments necessary for growth. Again, i think it's a great idea to expand the disclosure around 13f filings and reduce the time frames that they have to issue those filings or complete the filings. Apparently, a hedge fund can do something really sketchy and the sec, or nobody else will know about it.

For at least three months, if not three months and 45 days after that, currently a lot of things also don't have to be disclosed on a 13f filing. Yes, they do have to disclose if they own a stock or if they hold call and put options on a stock, but they don't have to disclose if they're shorting, a stock or if they hold contracts for differences. Cfds are typically most used in the uk and in europe and not really used as much in the us, but are effectively a way to leverage a position even further. Instead of purchasing the stock, you can use a contract for a difference which may allow you to leverage a stock up to five to ten times its underlying value, as in just basically taking out a 10 loan and purchasing 10 times more stock.

Guys be sure to, let me know down in the comments below what you think about hr 4617, 461a and 4619.. If you want to pick up some shares in amc, but you haven't even yet signed up to a trading platform, be sure to use fidelity because they don't sell their order flow to market makers like citadel who pass it through the dark pool. Basically, don't use weibull or robin hood to buy shares in amc. So if you want to buy other stocks like apple amazon, tesla, netflix or anything else, be sure to check out the link in the description below to get some free shares and if you're from the uk be sure to check out the link in the description below To free trade, because they also don't sell their 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.