The U.S. Securities and Exchange Commission issued a report earlier this month suggesting brokers—via gamified user interfaces and mechanisms such as payment for order flow—lured investors to increase their trading, which, in turn, resulted in higher revenues. Context The SEC report comes after a wave of speculative commentaries on online forums like WallStreetBets earlier this year in which market participants fueled a rise in the volume and share prices of popularized meme stocks. The report closely examined trade in GameStop Corporation. Shares of the stock rose as high as $513 premarket in late January 2021, after which, due to the risk management of clearing agencies, numerous brokers limited trades. This resulted in synthetic imbalances and a move lower in price. Findings Amid a rebellion against short-selling professional investors—evidenced by a short interest in GameStop, as a percentage of float, as high as 123 percent—the narrative months ago was that the meme …
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