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June 21, 2023

The SEC’s Proposed Market Structure Reforms are Essential to Protect Retail Investors and Industry Cries for More Cost-Benefit Analysis Must Not Stand in the Way

WASHINGTON, D.C.— Legal Director and Securities Specialist Stephen Hall issued the following statement in connection with the release of a Fact Sheet on the SEC’s market structure reforms and the role of cost-benefit analysis, ahead of a House Financial Services Committee hearing, where legislation involving those issue will be considered.

“Anyone evaluating the SEC’s market structure reforms must understand the challenges facing retail investors and the need to make our markets fairer and more transparent. The GameStop and meme-stock trading frenzies in early 2021 exposed longstanding market integrity and investor protection issues in the U.S. stock markets. Today, brokers often route retail investor orders to specialized wholesalers through a form of legalized bribery known as ‘payment for order flow.’  As a result, those orders aren’t subject to fair and competitive bidding and the resulting execution prices are worse than they should be. To cap it off, reporting requirements are weak so it’s hard to get a fair picture of how well investor orders are really being executed.

“The SEC has taken a bold step by proposing four reforms that aim to help level the playing field. Once finalized, these rules will 1) reduce the trading increments or “tick sizes” to help improve buy and sell prices, while also reducing the fees that create harmful trade-routing incentives; 2) make sure that most retail orders are sent through auctions where they’ll be exposed to open and competitive bidding; 3) strengthen the obligation of all brokers to get the best available prices for their clients; and 4) increase transparency by expanding the reporting requirements that shed light on the quality of trade executions that brokers have achieved for their clients. In our fact sheet, Better Markets has detailed these important reforms.

“Policymakers must also reject industry’s calls for ever-more burdensome, biased, and counterproductive cost-benefit analysis from the SEC. The truth is that quantitative cost-benefit analysis is ill-suited to financial regulation. It is an inaccurate and unreliable methodology; it unfairly emphasizes industry costs over often difficult to quantify but immensely important benefits; it consumes enormous agency resources; it sets the stage for industry challenges to final agency rules in court premised on alleged shortcomings in the agency’s cost-benefit analysis; and it induces agencies to dilute their own rules as they brace for those industry challenges. It also rests on the false premise that regulation threatens to impose crushing burdens on industry. These claims have consistently proven to be false throughout the history of financial regulation. Rather, strong regulation is what ensures investor confidence in the markets, robust participation in the capital formation process, and sustained economic growth. These principles—and above all, investor protection—should guide policymakers, not the strained arguments of the industry seeking to preserve its immensely profitable way of doing business in the securities markets.”

Read our full fact sheet here.


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

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