> Retail investors would feel "safer" b/c they think the government is protecting them. They will then be more inclined to not bother researching the companies they own, etc because, well, the government has got their back.
Why would this be the case?
A regulation prohibiting market orders doesn't even in theory serve to protect against poor-quality securities that will decline in value, it protects against poor quality market price information and/or order execution that results in an order being executed at a substantially different price than expected.
It might reduce the degree to which retail investors research information on order execution between different entities through which they might trade securities, but the jump from there to it reducing the degree to which they research the underlying securities seems unwarranted (if anything, it would seem more likely to focus their research more on the securities themselves.)
But, the thing is, its not like retail investors are bothering to research and understand the issues it would address now much at all, so its not like it would actually change anything except the degree to which they get bitten by them. (And, conversely, the degree to which counterparties benefit from them getting bitten by them.)
Why would this be the case?
A regulation prohibiting market orders doesn't even in theory serve to protect against poor-quality securities that will decline in value, it protects against poor quality market price information and/or order execution that results in an order being executed at a substantially different price than expected.
It might reduce the degree to which retail investors research information on order execution between different entities through which they might trade securities, but the jump from there to it reducing the degree to which they research the underlying securities seems unwarranted (if anything, it would seem more likely to focus their research more on the securities themselves.)
But, the thing is, its not like retail investors are bothering to research and understand the issues it would address now much at all, so its not like it would actually change anything except the degree to which they get bitten by them. (And, conversely, the degree to which counterparties benefit from them getting bitten by them.)