Will any US regulatory body propose or enact new restrictions on payment for order flow by July 2026?

The current administration withdrew PFOF/best execution proposals in June 2025 and has taken consistently pro-market actions (dropped crypto investigation, CFTC supporting prediction markets). The same administration reintroducing PFOF restrictions within 13 months of withdrawing them would be an extraordinary reversal with no precedent. The resolution scope includes FINRA and Congress, which broadens the surface area, but FINRA has shown no independent initiative on PFOF, and Congress is focused on other financial priorities. The EU PFOF ban effective 2026 creates a theoretical contagion vector, but the Q4 2025 earnings call showed zero management concern and no mention of PFOF risk — if contagion were materializing, management would at minimum acknowledge it. The 5-month remaining window is very short for the slow-moving US regulatory apparatus.

While the SEC is clearly not going to act under the current administration, the resolution scope's inclusion of Congressional action and FINRA deserves weight. HOOD becoming the #1 options venue creates a new political dynamic — dominant market participants attract more scrutiny historically. Congress has a pattern of holding hearings on market structure issues after retail investor events (GameStop 2021 led to hearings). A significant retail investor loss event in the next 5 months could trigger Congressional hearings that include PFOF restriction proposals. The insider selling pattern (-$185M net over 90 days) during peak favorable conditions is mildly concerning, though likely reflects lockup/diversification dynamics. The probability is low but the broad resolution scope and potential for exogenous catalysts keep it above the floor.

The base rate for major US financial regulatory proposals targeting a specific practice within any given 5-month window is very low — perhaps 5-10% even in neutral environments. The current environment is actively hostile to new financial regulation: the administration has been systematically deregulatory across SEC, CFTC, and crypto. Three separate lenses (Regulatory Reader, Gravy Gauge, Moat Mapper) classified the current PFOF environment as a cyclical tailwind. The Regulatory Reader specifically notes PFOF reform is 'historically revisited by each new SEC chair' — but the current chair is the one who withdrew the rules. The next administration change is 2029+. FINRA is an SRO that follows SEC leadership, not an independent regulatory actor on market structure. Congressional committees could theoretically hold hearings, but the current Congress has shown no appetite for PFOF reform. Even the prior 10% estimate may have been slightly generous given the Q4 confirmation of benign conditions.

The strongest signal is the current administration's revealed preference: they withdrew PFOF rules in June 2025 and have taken multiple deregulatory actions since. Reintroducing PFOF restrictions within the same administration would require an extraordinary catalyst. The Q4 2025 earnings confirmed zero management concern about PFOF regulatory risk. While the resolution scope includes Congress and FINRA, neither has shown any independent momentum toward PFOF reform. The 5-month window to July 2026 is very constrained for the slow US regulatory process. The EU PFOF ban has generated no observable US policy response.

The political environment is clearly favorable for PFOF continuation, but the resolution scope is broader than just SEC action. Congressional hearings on market structure could be triggered by an external event — a flash crash, a meme stock incident, or significant retail investor losses. HOOD's new status as the #1 options venue by volume increases its political visibility. The question only requires a proposal, not enactment, which is a lower bar. Still, with no current momentum toward any such proposal and a very short remaining window, the probability remains below 15%. The resolved sibling markets showed good committee calibration, supporting the prior 10% estimate as reasonable.

This market is testing whether a cyclical tailwind breaks within its cycle — which almost by definition is a low-probability event. The Regulatory Reader classified favorable PFOF conditions as cyclical, tied to the current administration. The administration has 2+ years remaining, far beyond the July 2026 resolution date. The Q4 2025 update provided no new risk signals — no mention of PFOF, no Congressional attention, no FINRA activity. Even the heavy insider selling is more consistent with diversification during favorable conditions than regulatory foreknowledge. The probability should be at or slightly below the prior 10% baseline.

Current administration withdrew PFOF rules and is actively deregulatory. Only 5 months remain to resolution. No new PFOF regulatory signals in Q4 2025 update. Probability is very low — requires an exogenous shock to trigger action within this constrained window.

The prior 10% estimate was well-calibrated based on sibling market results. Q4 earnings provided no new information that would shift the probability in either direction. The broad resolution scope (includes FINRA and Congress) prevents going much below 10%, as tail-risk events like a retail investor loss event or Congressional hearing cannot be fully ruled out. Maintaining near prior.

The combination of a deregulatory administration, SEC withdrawal of PFOF rules, zero management concern in Q4 earnings, and only 5 months remaining makes this a very low probability event. Even the broadened scope to Congress and FINRA does not materially increase the likelihood given the absence of any momentum. The prior 10% may have been slightly generous.