Last month, Gary Gensler said his Securities and Exchange Commission was taking a long, hard look at payment for order flow. He went so far as to call that system, by which the likes of Robinhood, E*Trade Securities and others get paid to direct customer trades to Citadel Securities and others, “an inherent conflict of interest.”

Given Gensler’s hyperactive regulatory imagination and appetite, that certainly sounds bad for the future of PFOF, and with it, four out of every five dollars say, Robinhood makes. Not so, says Dan Gallagher. According to Robinhood’s chief legal officer, once the terrifically uninformed Gensler learns about the amazing practice that incidentally happens to be crucial for the success of his business, he’s not only not going to ban PFOF—he’s going to put it in the Constitution.

The Securities and Exchange Commission is “going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors and they’re not going to ban it,” Robinhood’s Dan Gallagher told CNBC’s “Squawk Box” on Monday…. “At Robinhood, [payment for order flow] is the life blood of a no commission, no minimum balance brokerage. This is what has brought in a whole new generation of investors,” added Gallagher. “I think that the overwhelming evidence is that the current market structure works well for retail investors.”

It's true: We’re sure Gensler completely missed that whole GameStop thing while he was putting together President Biden’s financial services regulation team and getting ready to nominate himself to lead the SEC.

“The notion that our customers are stupid, that they need protection, that they need the government and the nanny state to come out and save them for making bad decisions, I think they’re insulted,” said Gallagher.

Yea, it’s definitely their intelligence being insulted, and not that of the veteran regulator, MIT Sloan professor and one of the youngest Goldman Sachs partners ever.

Robinhood’s chief legal officer says the SEC won’t ban payment for order flow [CNBC]

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