U.S. SEC votes to advance stock market overhaul proposals – Reuters

NEW YORK, Dec 14 (Reuters) – The U.S. Securities and Exchange Commission on Wednesday voted to propose some of the biggest changes to American equity market structure in nearly two decades, aimed at boosting transparency and fairness while increasing competition for individual investors' stock orders.
The proposals include requiring marketable retail stock orders to be sent to auctions before they are executed, a new standard for brokers to show they get the best possible executions for client orders, and lower trading increments and access fees on exchanges, the SEC said.
"We feel that these reforms, if enacted, will ultimately help the price discovery process and save investor’s money," said Joe Saluzzi, co-manager of trading at Themis Trading.
"Allowing orders to interact with each other, rather than segmenting them, will enhance competition and yield better prices."
Opening up individual investor orders that can be immediately executed to competitive auctions could lead to "significantly" better prices for investors, the SEC said. Under current practice, retail brokers send most such orders to wholesale brokers, sometimes for a fee.
"The competitive shortfall could be worth about $1.5 billion annually, compared with current practice — money that could go back into retail investors' pockets," said SEC Chair Gary Gensler.
The changes, if adopted, would represent the biggest shakeup to stock market rules since the SEC introduced Regulation National Market System in 2005, which was aimed at modernizing and enhancing an increasingly fragmented and largely electronic marketplace.
Ronan Ryan, president and co-founder of exchange operator IEX Group Inc said the reforms were a "constructive and positive effort to improve transparency, increase competition, and ensure that investors can access the best prices available in the market."
"It has been 17 years since the existing equity rules were adopted, and since that time, the stock market has seen significant change – including the advent of high-frequency trading, a dramatic decline in displayed liquidity on exchange, and a substantial rise in off-exchange trading," said Ryan.
"Modernizing regulation ensures that market competition among brokers, market makers, and exchanges continues to benefit investors.”
The order competition rule, which would require marketable retail orders to be sent to auctions, could lead to more such orders being matched on exchanges, like the Nasdaq (NDAQ.O) or Intercontinental Exchange Inc's (ICE.N) New York Stock Exchange, rather than by wholesale brokers, like Citadel Securities and Virtu Financial (VIRT.O). read more
Nasdaq said it believes in "transparent, fair, efficient, competitive and inclusive markets and that it looks forward to reviewing the SEC’s proposals.
Citadel Securities said in a statement that "any proposed changes must provide demonstrable solutions to real problems while avoiding unintended consequences that will hurt American investors."
Firms that benefit from the status quo, such as wholesalers and retail brokers that receive payments from them, will likely fight the SEC’s proposals, said Stephen Hall, Better Markets' Legal Director and Securities Specialist.
"It is imperative that the SEC resist industry pressure, carefully consider all stakeholder input, and finalize a set of rules that will truly help investors at long last to get a better deal on Wall Street," said Hall.
The SEC also voted to propose requiring brokers to provide more information on the quality of their customer trades, while also expanding the number of firms that must file the order execution reports.
The proposed changes will be put up for public comment until at least March 31 before the regulator moves to finalize the rules, which will also be voted on.
The regulator also voted to expand disclosures around the trading of company shares by insiders, such as executives and directors, that have received equity-based compensation.
Our Standards: The Thomson Reuters Trust Principles.
Federal Reserve policymakers expect to raise U.S. interest rates further, and keep them high for longer, than they had earlier anticipated, signaling Wednesday that squashing high inflation will likely take a bigger toll on the economy and the job market than they had hoped.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved

source