Sources told Charlie Gasparino of FOX Business that the listing of low-cost stocks allows speculative stocks to be traded on platforms like Robinhood and Schwab.
The Securities and Exchange Commission may soon reevaluate listing standards for major exchanges, in a move that could prevent Nasdaq and the New York Stock Exchange from listing speculative penny stocks, according to people with knowledge of the matter.
The SEC – also known as the chief police officer on Wall Street – has long classified any stock traded below $ 5 as penny stocks and, according to the commission, “these companies may have little or no profit” and are “highly speculative” “.
But the NYSE and Nasdaq combined list up to 1,000 companies that would meet the SEC’s penny stock designation and therefore may not be suitable for small investors.
In listing the companies, some regulators believe that the exchanges are giving a security guarantee to these stocks, according to people familiar with the matter.
A SEC spokesman declined to comment, as did press officers from the NYSE and Nasdaq.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| GME | GAMESTOP | 101.74 | -6.99 | -6.43% |
| AMC | AMC ENTERTAINMENT HOLDINGS INC | 8.01 | -0.28 | -3.38% |
| BB | BLACKBERRY LTD. | 10.05 | -0.53 | -5.01% |
The listing policy for low-cost stock exchanges was brought to the attention of the commission after Robinhood’s commercial frenzy. The deal involved a handful of long-standing, century-old stocks that exploded amid widespread message board hype that gained momentum among hordes of novice investors using the affordable, commission-free trading app.
Shares in video game retailer GameStop, which had traded below $ 5 for much of the summer, jumped to nearly $ 500 in January, during the height of the craze.
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The wave of trading ended up generating significant losses for investors, although it does not appear to be over yet, as GameStop’s shares have started to rise in the past few days to more than $ 100, after dropping to around $ 40. fluctuations generated a congressional hearing and SEC regulatory reviews, among other agencies.
As reported by FOX Business, the SEC’s oversight division is investigating whether the stock’s shares were manipulated by traders by making false claims about companies on message boards, encouraging investors to buy at inflated prices and then discarding low-priced stocks. before dropping value.
Shares in video game retailer GameStop, which had traded below $ 5 for most of the summer, jumped to nearly $ 500 in January during the height of the craze. (iStock)
Meanwhile, the SEC’s Trading and Markets Division may take a deep dive into listing standards for the NYSE and Nasdaq after discovering that Robinhood only allows trading of shares listed on a major exchange, FOX Business learns.
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Robinhood does not allow the trading of shares called “over the counter” that do not meet the standards of NYSE and Nasdaq (other discount brokers, such as Charles Schwab, allow such trading). If stocks in the midst of the commercial frenzy were pulled out of the stock market in the summer, investors’ losses would have been averted, say people close to the subject.
Robinhood does not allow the trading of shares called “over the counter” that do not meet NYSE and Nasdaq standards. (Getty Images)
Critics of the Nasdaq and NYSE stock quotes say the main exchanges justified the inclusion of penny shares in order to continue earning listing fees from these companies.
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But people on the stock exchange say that even companies that trade below $ 5 per share can have significant market value and therefore be suitable for investing. NYSE listing standards allow low-cost stocks to be listed if they have a market value of $ 50 million over a 30-day period, while meeting other limits. Nasdaq is said to have more tolerant market capitalization patterns.
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The issue of stock prices at a penny may be raised during hearings for confirmation of new SEC chairman Gary Gensler, scheduled for this week. Gensler will face a number of pressing issues when he takes over the SEC, including the regulation of special-purpose acquisition companies, cryptocurrency and the recent stock trading frenzy.