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Wagner Delivers Remarks at Hearing to Examine the SEC’s Equity Market Structure Reforms

Washington, June 27, 2024 -

Today, the House Financial Services Subcommittee on Capital Markets, led by Chairman Ann Wagner (MO-02), is holding a hearing entitled, “Solutions in Search of a Problem: Chair Gensler’s Equity Market Structure Reforms.”


Watch Chairman Wagner’s opening remarks here.


Read Chairman Wagner’s opening remarks as prepared for delivery.

“Today’s hearing will examine equity market structure reforms put forward by Securities and Exchange Commission (SEC) Chair Gensler that will reshape American equity markets. 

“To the casual observer tuning in today, that might sound like a sensible endeavor for a regulator, especially if the regulator identified clear examples of problems and crises in our markets. And if the regulator clearly demonstrated how the reforms would result in better outcomes for market participants.

“Unfortunately, those critical elements are missing from Chair Gensler’s proposed overhaul of our equity market structure.

“America’s capital markets are the deepest and most liquid in the world. Companies from all over the world choose to go public in the U.S. and list on American exchanges.

“Almost 12 billion shares trade each day in the U.S. through American exchange markets alone. Over the past 20 years, the U.S. equities markets have changed dramatically and for the better, becoming more competitive, efficient, and accessible for everyday American investors. 

“Since the introduction of zero-commission trading, which has become the norm since 2019, retail trading has seen record growth and now accounts for between 10 to 20 percent of trading volume in the U.S. Over 100 million Americans rely on our equities markets for their financial security, stability and retirement. 

“Nevertheless, in December 2022, Chair Gensler and the SEC proposed four interconnected equity market structure proposals that would upend our current market structure and harm millions of retail investors. 

“Then, in October 2023, the SEC proposed yet another significant equity market structure rule on volume-based pricing.

“For those of you keeping count, that’s five sweeping equity market structure proposals from the SEC in a span of less than a year. In March 2024, the SEC unanimously adopted one of those proposals, amendments to update Rule 605 disclosures and capture more useful information on order execution.

“You might be saying to yourself, ‘more useful disclosures and better data on execution quality sounds like a smart place for the SEC to start.’ 

“I would agree with you. 

“Taking that improved data from the Rule 605 updates, analyzing it, and letting your findings inform which additional reforms are necessary—or whether any reforms are necessary—would be the prudent approach for the SEC.

“Unfortunately, Chair Gensler disagrees, as he is intent on advancing the remaining four proposals.

“You might be saying to yourself, ‘Well, then surely the SEC has identified clear problems or failures these reforms will address. Or they can produce economic analysis demonstrating that market participants will unmistakably be better off because of these reforms.’

“I’m sorry to disappoint you again. Throughout its economic analyses of the remaining proposals, the SEC explicitly admits numerous times that the economic effects of the proposals are unknowable.

“Not to mention, the SEC’s economic analyses also inappropriately rely on data the SEC itself concedes is outdated and inaccurate. 

“Case in point: to justify three of the remaining four proposals, the SEC relies on trade execution quality data from Rule 605 reports despite SEC staff admitting that current Rule 605 reports offer limited usefulness. After all, updating and improving Rule 605 to yield more useful data is what the SEC recently approved.

“Ensuring that the SEC acts prudently and only issues regulations that are absolutely necessary after providing clear evidence of problems and analyses demonstrating the desired positive impacts shouldn’t be a partisan issue. Millions of everyday Americans depend on the success of our equities markets for their financial security. 

“These Americans are looking to us to ensure that Chair Gensler doesn’t use a wrecking ball when perhaps a scalpel would be more appropriate. 

“I would like to thank our witnesses for their testimony, and I look forward to our discussion.”


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