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

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In this article Shares of retail brokerage Robinhood popped Thursday after a report that U.S. regulators would not ban payment for order flow, a key part of the company's business model.

Bloomberg News reported that the Securities and Exchange Commission would stop short of banning payment for order flow, though the regulatory agency may still make rule changes that could lower the profitability of the practice.

Shares of Robinhood were up more than 8% in premarket trading. Payment for order flow is a controversial practice that effectively allows market makers and brokerage firms to split the profit made on trades from retail customers.

It is a key source of revenue for Robinhood and other low cost brokerage firms, and it helps them offer trading with no up-front cost.

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