WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the decision of the D.C. Circuit, issued today, that rejects all industry challenges to an important SEC rule that updates the way stocks are traded, as Better Markets urged in its amicus brief:
“The Court’s decision is an important victory for investors, markets, and the SEC itself. The Court upheld an SEC rule that will improve the way securities are traded at the major stock exchanges. That means savings for investors and more efficient markets for the benefit of companies and the economy. By reducing the ‘tick sizes’ or pricing increments for stock quotes, the SEC updated a 20-year-old rule that the markets have outgrown. The result will be more trading, more liquidity, and better prices for investors. And by reducing the fees that exchanges can charge for access, the SEC will also be helping investors save trading costs and receive fairer treatment from the brokers who route their orders for execution. The multiple benefits of the rule, which Better Markets highlighted in its amicus brief, are now intact with the Court’s ruling.
“The rule may seem especially technical, but think of it this way: When you turn your ignition key, you expect your car to fire up and take you where you want to go. That’s what usually happens, provided you have a good mechanic who maintains the engine. The exchanges and other trading platforms are much the same. They’re the engines for the securities markets, and if the SEC doesn’t maintain them properly, they’ll eventually break down. In addition, keeping up with the constant technology changes in the markets is essential to ensure that investors are treated fairly. And while the rule made seemingly small adjustments to fees, in fractions of a cent, the money adds up, especially for institutional investors that manage the 401(k)s and pension funds of millions of everyday Americans.
“The Court rightly rejected the industry’s two attacks on the rule. It held first, as we argued in our amicus brief, that the SEC had clear and ample authority under the securities laws to issue the rule. It then rejected claims that the SEC impermissibly changed its position about the fees after its earlier pilot project was struck down. As the Court explained, the SEC provided good reasons for the rule and took all contrary data into account. And the Court appropriately clarified the interpretation of the Supreme Court’s anti-agency decision in Loper Bright, observing that Congress can and does ‘ “confer discretionary authority on agencies,” including the authority to draw lines when lines must be drawn.’ This is a strong affirmation of the principle that agencies like the SEC must have appropriate discretion when implementing Congress’s broad mandates in the public interest.”
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Better Markets is a non-profit, non-partisan, and independent organization founded 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.
