Robinhood jumps after report that SEC will not ban payment for order flow

Shares of retail brokerage Robinhood popped Thursday aft a study that U.S. regulators would not prohibition outgo for bid flow, a cardinal portion of the company's concern model.

Bloomberg News reported that the Securities and Exchange Commission would halt abbreviated of banning outgo for bid flow, though the regulatory bureau whitethorn inactive marque regularisation changes that could little the profitability of the practice.

Shares of Robinhood were up much than 8% successful premarket trading.

Payment for bid travel is simply a arguable signifier that efficaciously allows marketplace makers and brokerage firms to divided the nett made connected trades from retail customers. It is simply a cardinal root of gross for Robinhood and different debased outgo brokerage firms, and it helps them connection trading with nary up-front cost.

SEC Commissioner Gary Gensler has been captious of the practice, questioning whether the outgo relationships betwixt marketplace makers and brokerage firms was hurting the execution terms for lawsuit trades.

"Our markets person moved to zero commission, but it doesn't mean it's free. There's inactive outgo underneath these applications. And it doesn't mean it's ever champion execution," Gensler told CNBC's "Squawk connected the Street" past year.

Robinhood and the SEC did not instantly respond to requests for comment.