Regulators say GameStop rally ‘raises questions of market efficiency’

Illustrations by Alex Castro / The Verge

On Monday, the Securities and Exchange Commission published an official staff report on the GameStop rally earlier this year, calling for more scrutiny of both short-seller activity and broker-dealers like Robinhood. The report is particularly harsh on Robinhood’s “payment for order flow” system, which rewards the company for increasing the number of trades.

Released under the anodyne name “Staff Report on Equity and Options Market Structure Conditions in Early 2021,” the report is the SEC’s first full opportunity to weigh in on the confusion surrounding GameStop’s unlikely stock market rally, as well as some of the Robinhood features that critics say made the rally more chaotic.

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