The top U.S. securities regulator on Wednesday unveiled a planned overhaul of Wall Street retail stock trading rules, aiming to boost competition for handling orders by commission-free brokerages to ensure mom-and-pop investors get the best price for trades.

U.S. Securities and Exchange Commission chair Gary Gensler told an industry audience he wants to require trading firms to directly compete to execute trades from retail investors.

The Wall Street watchdog plans to scrutinize growth in recent years of the payment for order flow (PFOF) practice, which is banned in Canada, the UK and Australia.

Some brokers, such as TD Ameritrade, Robinhood Markets and E*Trade, accept these payments from wholesale market makers for orders. In December 2020, Robinhood actually paid a fine related to the practice, which the SEC said raised costs for investors using the online brokerage.

A ban on the PFOF practice is not off the table, Gensler has said. On Wednesday, he said the practice has "inherent conflicts," while noting some zero-commission brokerages operate without PFOF.

"I asked staff to take a holistic, cross-market view of how we could update our rules and drive greater efficiencies in our equity markets, particularly for retail investors," Gensler said.

Investor advocates praised the SEC's plan, which would be the biggest shake-up of U.S. equity market rules in over a decade. But financial industry executives quickly blasted the plans, saying they could hinder commission-free brokerages from serving more investors.

(With input from Reuters)