Today, the House Financial Services Subcommittee on Capital Markets, led by Chairman Ann Wagner (MO-02), is holding a hearing entitled, “Oversight of the SEC’s Division of Trading and Markets.”
Watch Chairman Wagner’s opening remarks here.
Read Chairman Wagner’s opening remarks as prepared for delivery.
“Thank you all for joining us this morning. Today’s meeting represents the first in a long overdue series of hearings where we will hear directly from division directors at the Securities and Exchange Commission (SEC).
“Given the historic, and unprecedented, volume of proposed rulemakings being advanced at the SEC under Chair Gensler, it is imperative this Committee hold public hearings featuring the SEC staff responsible for overseeing these rulemakings.
“Today’s witnesses are important because the SEC’s Division of Trading and Markets impacts a wide variety of stakeholders participating in our public markets, including millions of main street investors saving for retirement, a down payment on a house, or their children’s future.
“I’d also like to note that it’s been more than four years since this Committee has had the SEC’s Division of Trading and Markets testify. I can assure you, that will not be the case under our leadership.
“Just last December, the SEC advanced four proposed rulemakings that will dramatically overhaul our current market structure and how it functions.
“Typically, when agencies seek to make meaningful reforms, they do so by advancing one targeted proposal at a time, and by presenting clear and convincing evidence of a problem or failure warranting such a drastic policy change.
“In the case of market structure reform proposals under Chair Gensler, the SEC has done neither.
“Instead of starting with one surgical proposal and observing its impacts after implementation to assess the need for additional proposals, Chair Gensler and Director Zhu have taken a wrecking ball to every corner of our current equity market structure in one fell swoop.
“And they’ve done so without any definite explanation or identifying any systemic market problems or failures.
“You might be saying to yourself, ‘well, surely the SEC can point to some economic effects of the proposals that justify such major reforms.’
“Yet again, the SEC comes up short. Throughout its economic analyses of the proposals, the SEC explicitly concedes numerous times that the economic effects of the proposals are unknowable.
“If that wasn’t enough, the SEC’s economic analyses are also improperly based on data the SEC itself admits is outdated and inaccurate.
“For example, to justify three of the four proposals, the SEC utilizes rule 605 reports, which provide trade execution quality information monthly. At the same time, the SEC staff has acknowledged that these reports have limitations and need reform.
“These deficiencies are not limited to the market structure proposals put forward by the Division of Trading and Markets.
“The division has authored additional proposals that inexplicably overlap and for which their impacts have been inadequately analyzed.
“It is vital the SEC only issues regulations that are absolutely necessary, and to avoid burdening main street investors. That is why I will be reintroducing the ‘SEC Regulatory Accountability Act.’
“This legislation, which has passed in previous Congresses with bipartisan support, will make sure the SEC does not arbitrarily implement unwarranted and complex rules.
“My bill would statutorily require the SEC to identify the problem a proposed regulation is seeking to address and conduct a thorough cost-benefit analysis before issuing any regulation. I would urge my colleagues to join me in protecting the capital markets that millions of Americans rely on for financial security and prosperity.
“I look forward to partnering with my colleagues on this Subcommittee to ensure U.S. equity markets remain the envy of the world and continue to work on behalf of market participants of all sizes, as well as our constituents trying to save for the American dream.”
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