WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the Securities and Exchange Commission (SEC) proposing to rescind rules that ensure investors receive the best prices:
“Today, the SEC took yet another step on the path to increasing costs for investors with its proposal to rescind what is known as the Trade-through Rule. The rule was put in place 20 years ago to ensure that investors receive the best prices on their securities trades by prohibiting exchanges from executing trades at worse prices than those available on other exchanges. In other words, the rule protects the execution of investors’ orders and guarantees they do not receive prices inferior to those available elsewhere.
“At today’s open meeting, the SEC suggested that it could rescind the rule because investors’ brokers will separately ensure that customers get the best prices on their trades. But the SEC has no rule imposing a duty of best execution on brokers. The SEC proposed a best execution rule in 2022, but it withdrew that proposal a year ago. As we have demonstrated previously, the existing rules governing brokers are weak and insufficient to protect investors and ensure they get the best prices on their securities trades. By nixing the Trade-through Rule establishing price requirements on exchanges, and also failing to update the rules policing brokers, the SEC is leaving investors to fend for themselves when buying and selling securities in the market. The result will be worse prices for people saving for retirement and more profits for securities firms and high-frequency traders.
“There is no question that the Trade-through Rule has had unintended consequences. But simply rescinding the Trade-through Rule is not the answer. Doing so would eliminate a core investor protection. The SEC says that rescinding the rule will assist investors for whom speed and quantity matter more than price. But it would leave investors for whom price is the priority unprotected. An SEC proposal that does not ensure that investors for whom price matters receive the best price available is not a proposal the SEC should adopt.
###
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.
