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Opening Remarks as Prepared for SIFMA’s Market Structure Conference: Equity Market Structure

Remarks by Joseph Seidel, Chief Operating Officer for SIFMA, as prepared for delivery at SIFMA’s Market Structure Conference: Equity Market Structure

Good morning.  I’m Joe Seidel, Chief Operating Officer at SIFMA, and it is my pleasure to welcome you to day two of our Market Structure Conference.  Many of you joined us yesterday for the listed options event, which I hope you found informative and useful, and today we’re back again to focus on equity market structure, a very hot topic right now.

I would like to thank our speakers and of course all of you for being here today.

SIFMA’s equity market committee covers regulatory and advocacy issues that impact sell-side firms’ equities business.  I’d like to recognize and thank Sapna Patel of Morgan Stanley, who chairs the committee, and vice chair Mark Campbell from Fidelity, for their work on today’s conference and their ongoing leadership. It’s been a busy year, to say the least.

As I discussed yesterday, throughout the last two years, stakeholders, academics and members of Congress from both sides of the aisle have expressed concerns with the volume and pace of new rule proposals from the SEC.  If you look at the Agency Rule List published by the Office of Management and Budget, the SEC is on track to propose and finalize 63 new rules by the end of Chair Gensler’s first four years in office.  This represents a dramatic increase in the pace of rulemaking from the previous two Chairs, Mary Jo White and Jay Clayton, who finalized 22 rules and 43 rules, respectively, that they had proposed during their terms.  Of the number of rules proposed over the last two years, only eight have a specific Congressional mandate.

Of the multitude of proposals issued by the SEC, perhaps the most controversial and least considered are the SEC’s equity market structure proposals.  These proposals would dramatically overhaul U.S. equity market structure and potentially undermine the recent expansion of market access that investors enjoy today.  These proposals do not address market failures, and they lack clear direction from Congress who included none of them in its report on the GameStop meme stock phenomenon.  Both market participants and academics find they could well do more harm than good, particularly for the retail investor.  We believe there is considerable risk that they could jeopardize rather than enhance our world-leading capital markets, especially if they are adopted and/or implemented together.

Stakeholders from all corners of the markets have voiced opposition to the proposals except for the proposal to update Rule 605, which has not been substantively updated since its adoption in 2000.  SIFMA believes this is a natural starting point for the path forward, as it would give the SEC better access to the data it needs to fully assess market quality and to consider whether additional rulemaking is needed and how any such rulemaking should be designed.

We will hear much, much more about this today.  Our first panel is primed and ready to dig into how the proposals could impact all market participants, as well as the long-delayed Market Data Infrastructure Rule and other top-of-mind issues affecting the U.S. equity markets.  Moderating that panel is Elad Roisman, Partner at Cravath, Swaine & Moore.  Elad is a former Commissioner and Acting Chairman of the SEC, and currently represents clients on a broad range of complex regulatory and strategic matters.  Throughout his career, he has focused extensively on equity market and fixed income market structure matters.  While at the SEC, he played an instrumental role in shaping the agency’s rulemaking, enforcement and international work and helped drive the SEC’s efforts to modernize the regulation of the U.S. equity markets and Treasury markets.  Elad received a B.A. cum laude from Cornell University and a J.D. from Boston University School of Law.

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