EU Watchdog Wants Zero-Commission Probe After GameStop
Irene Madongo, 24 February 2021
Commission-free trading should be scrutinized following the extreme volatility of stock in GameStop driven by a surge in trading using social media, according to the head of the European Union’s markets regulator.
Steven Maijoor, chairman of the European Securities and Markets Authority, took aim on Tuesday at a move toward allowing investors to trade stocks for free. He told the European Parliament’s economic affairs committee that low-cost or no-cost trading can create less transparency for investors.
“The phenomenon of zero-commission trading needs to be looked at in more detail,” Maijoor told lawmakers. He was speaking after trading in shares of the Texan video games retailer GameStop Corp. attracted the attention of authorities in the U.S.
“To be sure, as such, lower costs for retail investors are a welcome development, given the importance of costs in determining investors’ long-term returns. However, there is no such thing as a free lunch,” Maijoor warned. Costs could end up being passed on to clients of institutional investors, he added.
