#USHouseMarketStructureDraft ### **#USHouseMarketStructureDraft – Breaking Down the Proposed Financial Market Reforms**

The **U.S. House Market Structure Draft** refers to a set of proposed reforms aimed at modernizing stock market regulations, improving transparency, and addressing concerns around **payment for order flow (PFOF), off-exchange trading (dark pools), and high-frequency trading (HFT)**.

This draft legislation is part of an ongoing debate on how to make markets fairer for retail investors while maintaining liquidity and efficiency.

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## **🔍 Key Provisions of the Draft Proposal**

### **1. Payment for Order Flow (PFOF) Restrictions**

- **Potential ban or stricter limits** on brokers selling retail orders to market makers (e.g., Citadel Securities, Virtu).

- **Goal:** Prevent conflicts of interest where brokers may prioritize payment over best execution.

- **Impact:** Could raise trading costs for commission-free brokers (Robinhood, Webull, etc.).

### **2. Dark Pool & Off-Exchange Trading Reforms**

- **Increased transparency** in **wholesale/internalization** of trades (where retail orders are filled off-exchange).

- **Possible minimum thresholds** for orders to be executed on lit exchanges (NYSE, Nasdaq) instead of dark pools.

- **Goal:** Ensure price discovery happens in public markets, not hidden venues.

### **3. High-Frequency Trading (HFT) Regulations**

- **New rules on latency arbitrage** (HFTs front-running slower traders).

- **Potential fees/caps** on excessive order cancellations (spoofing prevention).

### **4. Best Execution & Retail Investor Protections**

- **Stricter enforcement** of brokers providing **best available prices** (not just "NBBO" compliance).

- **Possible real-time reporting** of execution quality for retail trades.

### **5. SEC & Market Maker Oversight**

- **More authority for the SEC** to monitor and penalize market manipulation.

- **Increased capital requirements** for market makers to prevent systemic risks.