The Healthy Markets Association applauds the Securities and Exchange Commission for proposing several new rules designed to better protect investors

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HMA applauds the Securities and Exchange Commission proposing several new rules designed to better protect investors, and promote more fair, orderly, and efficient markets. Unfortunately, the proposals do not address the increasing concentration of market power and advantages accruing to a small number of banks and trading firms. HMA is deeply concerned that the Commission has continued to ignore its obligation to ensure that exchanges’ rules – and particularly their transactions fees and rebates – (1) are equitable, (2) aren’t discriminatory, and (3) aren’t unduly burdensome on competition.

The Healthy Markets Association (HMA) applauds the Securities and Exchange Commission for proposing several new rules designed to better protect investors, and promote more fair, orderly, and efficient markets.

HMA has long advocated for reforms to order execution disclosures, improved transparency and access to better-priced orders, order-by-order competition, and enhancements to best execution. All of these overdue, essential reforms are officially on the Commission’s docket.

Healthy Markets supports the Commission’s goals articulated in the proposals, which include:

  • Updating and enhancing brokers’ best execution obligations to ensure that brokers have robust policies and procedures designed to ensure that they are fulfilling their obligations to put their investors’ interests first;
  • Improving disclosures of order execution information by expanding the scope of firms that must make Rule 605 disclosures, modernizing how orders are categorized, and enhancing the information required to be reported;
  • Modernizing trading price increments, lowering access fees, and enhancing transparency into the best available prices; and
  • Promoting order competition for orders executed through retail trading channels, which may include orders for many smaller institutions.

“For too long, the plumbing of the US equity markets have been oriented to protecting revenues for brokers, exchanges, and other market intermediaries,” said Tyler Gellasch, President and CEO of HMA. “These proposals would re-establish the principle that brokers’ top priority should be fulfilling their fiduciary obligations to their customers, reduce conflicts of interest for market intermediaries, and reduce costs for investors.”

Unfortunately, the proposals do not address the increasing concentration of market power and advantages accruing to a small number of banks and trading firms. HMA is deeply concerned that the Commission has continued to ignore its obligation to ensure that exchanges’ rules – and particularly their transactions fees and rebates – (1) are equitable, (2) aren’t discriminatory, and (3) aren’t unduly burdensome on competition.

“It’s disappointing that the Commission has ignored customized pricing structures that allow some firms to secretly make 40% or more per share traded than everyone else,” said Chris Nagy, Research Director of HMA. “Investors, smaller brokers, and other market participants shouldn’t be compelled to continue subsidizing the world’s largest traders.”

HMA looks forward to working with our members to offer comments to improve the Commission’s proposals, which should be adopted without delay.

About Healthy Markets
The Healthy Markets Association is a not-for-profit member organization focused on improving the transparency, efficiency, and fairness of the capital markets. Healthy Markets promotes these goals through education and advocacy to reduce conflicts of interest, improve timely access to market information, modernize the regulation of trading venues and funding markets, and promote robust public markets. Its members include public pension funds, investment advisers, broker-dealers, exchanges, and data firms. HMA members have come together behind one basic principle: Informed investors and policymakers are essential for healthy capital markets.

To learn more about Healthy Markets Association and our initiatives, please check out our website. Twitter: @healthymkts

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Chris Nagy

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