I believe this is to punish RH for offering zero commissions. Especially on options. I seriously think what RH offers, for anyone who’s traded options on the retail side, is a game changer.
Sometimes what's good for the 1 person isn't good for everyone.
For example, if a bank starts giving out 0% interest 100 year mortgages (with some fine print that gives them some obscure revenue source to make it possible for them to make such an appealing offer) the bank should still get in trouble in my opinion if the consumer isn't informed about how they're getting such an amazing deal, because you're removing the consumer's ability to make an informed decision.
I believe for this example to be correct, the bank would also be hiding in its documentation that you have to pay an annual $100,000 mortgage paperwork fee for this 0% loan.
The article states that RH cost its consumers more in bad trade execution than it saved them in commissions. How are you sure this didn't happen to you?
I trade in multiple platforms and I put in limit orders (RH doesn’t even allow market afaik). To be fair, I am probably not your typical trader since I’ve been a fintech developer in the past as well as have been involved in analyzing many SEC cases for/against major financial institutions. I will say this: it’s extremely hard to prove execution quality on options trading let alone doing it in 2020 when the market was so volatile.
I have sympathy for that sentiment, but in practice that train has long left the station.
My own comment wasn't a plea for government to interfere, btw. Just a cynical admission that active trading is bad for the vast majority of people.
(My own money is sitting in the most boring ETF I could find, but loaded with about 3x leverage. Given the regulatory requirements of the industry I work in, I wouldn't be allowed to trade actively anyway, but I don't feel like I'm missing out.)
For example, if a bank starts giving out 0% interest 100 year mortgages (with some fine print that gives them some obscure revenue source to make it possible for them to make such an appealing offer) the bank should still get in trouble in my opinion if the consumer isn't informed about how they're getting such an amazing deal, because you're removing the consumer's ability to make an informed decision.