WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on Better Markets releasing a pair of fact sheets before a House Financial Services Committee hearing entitled “Oversight of the Securities and Exchange Commission” with SEC Chair Gary Gensler. The Fact sheets focus on the need for additional resources at the SEC and the SEC’s proposed market structure reforms.
“As Better Markets pointed out in its recent reports on the SEC’s crypto work and overall record on regulation and enforcement, the SEC is making significant progress in its mission to protect investors and maintain fair, orderly, and efficient markets. Our fact sheets provide two important takeaways. First, the SEC has been outgunned for too long and it should get the resources it really needs to oversee a vast market with huge enforcement challenges, especially in the crypto space. Second, highlighting the importance of its work are the four recent market structure proposals that will help retail investors get fair prices for their securities trades, not scalpings at the hands of sophisticated wholesaler firms.
“The SEC has performed admirably despite staffing levels at the agency being at or below FY16 levels. Over the past decade, the scope and breadth of the SEC’s responsibilities have increased dramatically, while the agency’s funding has failed to keep pace. To continue overseeing the growing and ever-more complex markets, and to address numerous longstanding problems, the SEC must have additional resources at its disposal. Fortunately, the FY23 appropriations fully funded the agency’s budget request, enabling the agency to hire more staff and begin catching up to the growth in the markets over the past few years. Fully funding the SEC’s budget request in FY24 would further enable the agency to carry out its mandate.
“Much has also been made of the SEC’s Market Structure Reform Proposals. The Gamestop and meme-stock trading frenzies in early 2021 highlighted longstanding market integrity and investor protection issues in the U.S. equities markets, including the increasingly fragmented state of our markets, practices such as payment-for-order-flow, and the weak and seldom enforced rule requiring broker-dealers to obtain the best execution for their clients. Taken together, the SEC’s proposed reforms have the potential to improve the fairness and transparency of our securities markets and ensure retail investors are not unfairly exploited by their brokers and other financial intermediaries.
“Predictably Wall Street and its allies have circled the wagons against these proposals. This includes the wholesaler high frequency trading firms that pocket billions in profits annually from their wealth-extraction methods, as well as other platforms that sell their retail order flow for their cut of the profits. It is crucial that the Committee and all of Congress consider the interests of retail investors and Main Street over the priorities of Wall Street as it continues to review these important changes.”
Fact Sheet: SEC Market Structure Reforms
Fact Sheet: SEC Staffing Levels Have Not Kept Pace with Growth of the Markets
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.