The US House Financial Services Subcommittee on Capital Markets recently held a hearing to scrutinize the Securities and Exchange Commission's (SEC) proposed equity market structure reforms. Led by Chairman Ann Wagner, the committee expressed concerns about the lack of clear evidence supporting the reforms and their potential impact on market stability and retail investors.

The SEC's proposals aim to overhaul the US equity markets, but Chairman Wagner argued that the commission has failed to provide sufficient economic analysis and justification for the changes. She highlighted the existing liquidity and competitiveness of the US capital markets, with 12 billion shares traded daily, and expressed concerns about the potential risks to retail investors, who account for 10-20% of the trading volume.

The hearing focused on five key proposals introduced by the SEC in less than a year, including changes to Rule 605 concerning order execution data. Wagner suggested that the SEC should slow down and conduct more thorough cost-benefit analyses before implementing new rules. She emphasized the need to preserve the conditions that have attracted competition and efficiency to the US equity markets.

The Supreme Court's recent decision requiring jury trials for SEC fraud cases in federal court may also impact the commission's enforcement strategies. This ruling, combined with the hearing, signals a growing trend of constraining federal regulators' authority.

In conclusion, the House committee's hearing highlighted the need for more careful consideration and evidence-based decision-making in the SEC's equity market reforms. As the US equity markets continue to evolve, it is essential to prioritize market stability, retail investor protection, and thorough analysis to ensure that any reforms benefit all market participants.