Stocks of brokerages and exchanges slumped Friday after the US Justice Department said it was investigating high frequency trading for illegal practices TD Ameritrade Holding Corp. (AMTD), Charles Schwab Corp. (SCHW), and E*Trade Financial Corp. (ETFC) saw their share prices slide 4.22%, 4.82%, and 7.83%, respectively, on Friday, following fears of a ban on high frequency-trading and related practices. High frequency trading, or payment-for-order-flow deals, have helped brokerages earn millions of dollars in annual revenues. Brokerages have been benefiting from high-frequency trading by selling orders to middlemen who use high-speed strategies to create payment-for-order-flow arrangements. Discount brokerages have been selling most of the orders they receive from clients to wholesale companies. Wholesale companies then trade against orders received from discount brokerages without sending these orders directly to stock exchanges. According to analysts’ estimates, discount brokerages generate hundreds of millions in revenues from this practice annually; E*Trade generates about $92.5 million; Charles Schwab makes $100 million; and TD Ameritrade generates around $227 million annually. Charles Schwab, the largest discount brokerage in the US based on market capitalization, has however tried to distance itself from high-speed trading. Company Chairman, Charles Schwab, and CEO, Walter Bettinger II, said in a letter last week: “High-frequency trading is a growing cancer that needs to be addressed.” Last Monday, the Federal Bureau of Investigation (FBI) confirmed it had been investigating a wide range of activities conducted by high-frequency traders for months. The FBI is investigating the case as part of the bureau’s ongoing probe into insider trading. The agency is also looking into the possibility of high-frequency traders front-running retail investors who do not have access to sophisticated computers.