Gamestop prompts possible new trade rules

The Gamestop Corp. trading frenzy has prompted U.S. regulators to consider new rules for everything from short-selling to investing with options and gamification, indicating watchdogs are just getting started in responding to the market mayhem.

In a letter to Sen. Elizabeth Warren, acting Securities and Exchange Commission leader Allison Herren Lee ticked off several rule changes that the regulator should “seriously consider.” They include toughening requirements for brokers that offer options trading, new demands for brokers that sell their customers’ stock orders to other firms and stepped up disclosure standards for hedge funds and other traders who bet against shares.

Meanwhile, the Financial Industry Regulatory

Authority, which oversees brokerages, said it’s reviewing whether its rules adequately address the potential risks posed by smartphone trading apps that can urge investors to keep trading with technological prompts and nudges. Warren, D-mass., released the responses from Lee and FINRA Chief Executive Officer Robert Cook Tuesday.

The astronomical rise of Gamestop and other stocks, fueled by bullish posts on social media, has captured the attention of Capitol Hill. The Senate Banking Committee is holding a hearing Tuesday featuring academics and market experts following an earlier one held by the House Financial Services Committee last month that featured some of the central players in the drama, including Robinhood Markets CEO Vlad Tenev and Citadel founder Ken Griffin.