Hood shares declined by almost 7% from their opening price during yesterday’s trading session. It even went further down by about 1.8% during the extended session, trading at about $43 in that extended trading session.
Trouble For Hood Shares
Analysts attributed Hood’s price decline to SEC’s order flow ban – a practice with which trading companies have earned multiple billions in revenue. The SEC chair yesterday told news media that the commission is considering banning order flow payments. This practice involves brokers giving trade execution orders to market makers to make some gains in return.
In an earlier company roadshow that preceded its IPO, Robinhood admitted that order flow payments are often better than standard ones. The company’s CFO stated that “order flows enable our small-scale investors to invest and not use their profits to pay for commissions.” The SEC chair opined that Hood’s order flow practice contradicts its trading provision services. Robinhood has been on the SEC radar following the stock market squeeze in January 2021, when some stocks made exponential gains in a short time.
Hood Shares And SEC Issues
Robinhood was founded in 2012 and quickly rose to be the favorite platform for young investors to gain exposure to the stock market. Its share value rose substantially within a few days following its public launch some weeks back. But MarketWatch data revealed that Hood’s stock price declined by about 6.8% in the last 30 days and almost 12% in the past week.
The data further remarked that Hood’s stock was rated ‘over’ by 15 ratings. Despite intense competition in recent times, Robinhood keeps creating various investment options to retain its young investors’ base.
Now, there is a new competition for Robinhood. Payment solution behemoth, PayPal, has announced that it’s about to create a brokerage platform for its large user base to gain exposure to the stock market. This news and similar ones are reasons why Hood investors might be keen to jump ship to the competition.
China’s SEC, Securities, Blockchain, And Smart Contracts
Following a clampdown on the digital asset space, the coalition of securities in China held a conference to deliberate the way forward. However, the top executives of China’s financial regulatory bodies present at the meeting clarified that the authorities believe in the blockchain industry. One of them said, “blockchain can lead to the digital evolution of the securities sector.” he further revealed that blockchain development and application is already in the authorities’ 5-year development plan.
Hence, the government is providing enough resources for blockchain technological improvement in vital areas of the economy. One of the visible efforts of the government is the development of China’s central supervision chain for the stock exchange to create a blockchain version of securities.
The next step is to deploy it to an ideal use case before developing a blockchain for other fields. Thus, the south Asian country is planning to use the basic technology of the digital currencies that it hates so much in a way that contradicts the industry’s ethics.