We untangle the stock trade to explain the payment for order flow controversy. : The Indicator from Planet Money Everyone's a stock trader these days. With a press of a button, companies like Robinhood allow everyday people to buy and sell shares with no fee. But, this practice is just a tad bit controversial.

The price of free stock trading

The price of free stock trading

  • Download
  • <iframe src="https://www.npr.org/player/embed/1106468243/1106477253" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

People are reflected in the window of the Nasdaq MarketSite in Times Square. Spencer Platt/Getty Images hide caption

toggle caption
Spencer Platt/Getty Images

People are reflected in the window of the Nasdaq MarketSite in Times Square.

Spencer Platt/Getty Images

With a click of a button, anyone can become an amateur stock trader. This is all thanks to companies like Robinhood, E-Trade, and Charles Schwab, which allow everyday people to buy and sell stocks for free. But how are these companies making money?

The magical ingredient is a practice called payment for order flow. However, this practice has garnered significant controversy, to the point where the SEC (U.S. Securities & Exchange Commission) wants to crack down on it. Today on the show, we break down the players in the stock trade to explain why.

Music by Drop Electric. Find us: Twitter / Facebook / Newsletter.

Subscribe to our show on Apple Podcasts, Spotify, PocketCasts and NPR One.