A proposed overhaul of U.S. equity trading rules was met with skepticism by some financial firms, who said, “If it ain’t broke, don’t fix it.” However, other traders welcomed the proposed changes and their promise of greater transparency and improved market access for investors.
On Wednesday, the U.S. Securities and Exchange Commission (SEC) unveiled more than 1,000 pages of proposals that Chairman Gary Gensler said would boost competition in the stock markets. The changes would affect everyone, from wholesale firms that handle orders to exchange operators and retail brokers. It would be the biggest change to the American equity market structure in nearly two decades.
Among other things, the proposals would require market participants to compete in auctions for the right to process many orders within milliseconds. This could lead to more stock orders being executed on exchanges such as Nasdaq and the New York Stock Exchange rather than by large brokers.
“Some of the SEC’s proposed changes could resurrect discriminatory barriers to entry and harm millions of retail investors. The SEC should not be playing politics with the ability of individual Americans to improve their financial lives.”Lucas Moskowitz, associate general counsel at Robinhood Markets Inc.
“There are real conflicts in the current market model,” Gensler said in a call with the media. “Our job as an agency is to develop a national market system that leads to greater competition and efficiency.”
The agency’s three Democrats, led by Gensler, supported the proposals during a marathon session that lasted more than five hours. The SEC’s two Republicans opposed some of the measures.