WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy, issued the following statement in connection with the SEC withdrawing 14 proposed rules:
“Last Thursday, the SEC withdrew 14 rules that it had previously proposed in furtherance of its mission to protect investors. These rules ranged from regulations that would have ensured investors receive the best prices when trading securities to measures that would have protected investors from the potential dangers of artificial intelligence to guidelines that would have required broker-dealers and investment advisers to strengthen their cybersecurity. By withdrawing these proposed rules, the SEC is leaving investors to fend for themselves against proliferating marketplace risks.
“New SEC Chair Paul Atkins has said that he wants the agency to promote rather than stifle innovation. However, regulation must also adapt to support market innovations in order to ensure that investors do not get left behind. Antiquated rules are a recipe for investor harm. Effective rulemaking recognizes the changing industry landscape and responds accordingly.
“In the absence of the rules withdrawn by the SEC, investors are left unprotected. The rise of high-frequency trading firms and the practice of payment for order flow means that ordinary retail investors are not getting the best prices for their trades. This situation will persist now that the SEC has withdrawn the rule that would have required brokers to obtain the best execution for their customers—a requirement that should not be controversial.
“What’s more, the use of artificial intelligence will further transform the securities industry. The SEC should put rules in place to govern how the industry uses AI. Unfortunately, the withdrawal of the rule the SEC proposed to regulate AI means that there will be no guardrails protecting investors. Cybersecurity threats also will only increase in the coming years. The SEC’s decision to withdraw rules to insulate investors from these vulnerabilities is baffling.
“The SEC has yet to unveil its rulemaking agenda under Chair Atkins, and we hope that agenda puts investors first— something that the SEC’s decision to withdraw its pending rule proposals does not do.”
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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.
