Thu, June 27, 2024 at 23:51

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I want to discuss the recent House Financial Services Subcommittee hearing on SEC Chair Gary Gensler's proposed equity market structure reforms.

  • 
• Annie

  • Hi, Kang-hoon!😊 That sounds interesting.

  • What exactly are these reforms about?

  
• 

  Kang-hoon

  • The reforms aim to overhaul the current structure of American equity markets.

  • However, the hearing, led by Chairman Ann Wagner, questioned the necessity and impact of these changes.

• Annie

  • Oh, I see.

  • So, what were Wagner's main concerns?🤔

  
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• 

  Kang-hoon

  • Wagner noted that the U.S. capital markets are already very liquid and competitive, with 12 billion shares traded daily.

  • She argued that the SEC's own economic analyses couldn't quantify the impacts of the proposals.

• Annie

  • That's a lot of shares!😲 Did she mention anything specific about retail trading?

  
• 

  Kang-hoon

  • Yes, she did.

  • Wagner pointed out that retail trading has increased since zero-commission trading was introduced in 2019, now constituting 10-20% of the trading volume in the U.S.

• Annie

  • Interesting!

  • So, what did the market participants say during the hearing?

  
• 

  Kang-hoon

  • Market participants expressed concerns that the new rules would disrupt capital markets, likely at the expense of everyday investors.

  • 

  • They emphasized the need for modern market data before implementing such reforms.

• Annie

  • That makes sense.

  • Were there any specific proposals discussed?

  
• 

  Kang-hoon

  • Yes, the hearing focused on five key proposals introduced by the SEC in less than a year.

  • One of them, approved in March 2024, involves changes to Rule 605 to enhance order execution data.

• Annie

  • Did Wagner suggest any alternatives or solutions?

  
• 

  Kang-hoon

  • Wagner suggested that the SEC should slow down and focus on implementing rules backed by sufficient evidence and proper cost-benefit analysis.

  • She stressed the importance of not jeopardizing market stability.

• Annie

  • That's a cautious approach.

  • What about the Supreme Court's recent decision on the SEC's enforcement powers?

  
• 

  Kang-hoon

  • The Supreme Court ruled that defendants in SEC fraud cases have a right to a jury trial in federal court, which limits the SEC's ability to prosecute complaints internally.

  • This decision will impact the SEC's enforcement strategy.

• Annie

  • Wow, that sounds like a significant change!

  • How might this affect other regulatory agencies?

  
• 

  Kang-hoon

  • This ruling could influence other regulatory agencies by constraining their authority.

  • It's part of a broader trend of court decisions limiting federal agency powers.

• Annie

  • Thanks for the detailed explanation, Kang-hoon.

  • So, do you think this news is good or bad for the market?

  
• 

  Kang-hoon

  • In my view, this news is a negative development.

  • The uncertainty and potential disruptions from the proposed reforms could harm market stability and investor confidence in the short term.

• Annie

  • Got it.

  • Thanks for your insights!🙏

  
• 

  Kang-hoon

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.