SEC Chair White Summarizes Equity Market Structure Developments

SEC Chair Mary Jo White summarized historical and recent developments in SEC equity market structure rulemakings.

Chair White emphasized that regulators must fully understand the evolving marketplace in light of technological advancements. She said that regulators must precisely identify the issues before making fundamental changes and fully assess the likely consequences of doing so. She highlighted a number of targeted initiatives aimed at improving market structure, including: (i) ensuring the operational integrity of critical market infrastructures; (ii) improving market transparency and disclosures; and (iii) constructing more effective markets for smaller companies.

Among other rulemaking developments, Chair White noted that she expects the SEC will “consider very soon” a proposal to provide customer-specific institutional order routing disclosures and targeted enhancements to existing order routing disclosures for retail customers.

Chair White delivered her remarks before the SEC Historical Society.

Lofchie Comment: It is not obvious that the problems smaller companies are facing today are primarily a result of our market structure. Two more obvious problems may be (i) the heavy burden of regulation that is generally associated with a company going public; and (ii) the particularly heavy regulation of investment research, which may make it too expensive (and lacking any profit opportunities) to publish research on small companies.