Sources tell FOX Business Charlie Gasparino that the listing of penny stocks makes it possible to trade speculative stocks on platforms like Robinhood and Schwab.
The Securities and Exchange Commission may soon re-evaluate the listing standards of major stock exchanges in a move that could prevent the Nasdaq and the New York Stock Exchange from listing speculative penny stocks, according to people familiar with the matter.
The SEC – also known as the Wall Street top executive – has long classified a stock trading below $ 5 as a penny stock, and according to the commission, “these companies may have little or no earnings” and “highly speculative ‘.
But the NYSE and Nasdaq combined contain a list of as many as 1,000 companies that will meet the SEC stock indicator and therefore may not be suitable for small investors.
According to the people who carry knowledge, some regulators believe that the exchanges provide an immeasurable security of these shares.
An SEC spokesman declined to comment, as did NYSE and Nasdaq officials.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| 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 exchange’s listing policy for penny stocks has been brought to the commission’s attention following the Robinhood trading frenzy. The trade involves a handful of long penny stocks that exploded amid a widespread message board upheaval that gained traction among hordes of novice investors using the no-commission and accessible Robinhood trading program.
Shares of video game retailer GameStop, which traded below $ 5 for most of the summer, rose to nearly $ 500 in January at the heart of the mania.
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The trade eventually resulted in significant investor losses, although apparently not over yet, as GameStop shares have begun to climb to more than $ 100 per share in recent days after falling to around $ 40. The wild fluctuations resulted in a congressional hearing and regulatory reviews of the SEC among other agencies.
As reported by FOX Business, the SEC’s enforcement department is investigating whether the shares were manipulated by traders who make false allegations about the companies on message boards, enticing investors to buy at the high prices and then dump shares just before they crashed. . value.
Shares of video game retailer GameStop, which traded below $ 5 for most of the summer, jumped to nearly $ 500 in January at the heart of the mania. (iStock)
Meanwhile, the SEC’s Division of Trade and Markets could take a deep dive into the listing standards for the NYSE and Nasdaq after discovering that Robinhood can only trade shares listed on a major stock exchange, FOX Business has learned.
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Robinhood does not allow the trading of so-called ‘over the counter’ penny stocks that do not meet NYSE and Nasdaq standards (other discount brokers such as Charles Schwab allow such trading). If the shares were delisted in the summer, investor losses would be averted, people close to the matter say.
Robinhood does not allow the trading of so-called ‘over the counter’ penny stocks that do not meet NYSE and Nasdaq standards. (Getty Images)
Critics of the Nasdaq and NYSE penny stock listings say the major exchanges have justified the inclusion of penny stocks to continue to earn listing fees from these companies.
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But stock market participants say even companies that trade less than $ 5 per share can have significant market value and therefore be fit to invest. The NYSE listing standards allow penny stocks to be listed if they have a market value of $ 50 million over a 30-day period while meeting other thresholds. Nasdaq is said to have softer market capitalization standards.
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The issue of share list may also come up during the hearings in confirmation of President Biden’s incoming SEC chairman Gary Gensler, which is scheduled for next week. Gensler will face a number of button-ups when he takes over the SEC, including regulating specialty ventures, cryptocurrency and the recent stock trading frenzy.