Lawmakers Challenge SEC's Equity Market Changes

The House Financial Services Subcommittee, led by Chairwoman Ann Wagner, held a hearing to scrutinize the equity market structure reforms proposed by SEC Chair Gary Gensler. The lawmakers expressed concerns about the lack of clear evidence and justification for these changes.

Concerns About Lack of Evidence

Chairwoman Wagner pointed out that the U.S. stock markets are already highly liquid and competitive, with 12 billion shares traded daily. She argued that the SEC has not provided sufficient economic analysis to support the need for these reforms. Wagner also criticized the SEC's reliance on outdated and unreliable data, such as Rule 605 reports.

Potential Harm to Retail Investors

The hearing participants warned that the proposed changes could potentially harm retail investors, who have benefited from the increased competition and efficiency in the markets. They urged the SEC to slow down and focus on implementing effective rules backed by strong evidence.

Supreme Court Ruling Impacts SEC Enforcement

Concurrently, the Supreme Court ruled that the SEC must use jury trials in fraud cases, rather than its in-house administrative proceedings. This decision will reshape the SEC's enforcement strategies, as civil fraud cases will now have to be heard in federal courts.

Calls for Prudent Regulation

Chairwoman Wagner emphasized the importance of preserving the stability and integrity of the U.S. stock markets, which millions of Americans rely on for their financial well-being. She called for the SEC to take a more cautious and evidence-based approach to any market structure reforms.