Why Rule 605 Must Be Updated Before Other Rulemaking: A Video Blog

The U.S. equity markets play a critical role in helping companies expand and grow and helping individuals and families achieve their financial goals. Studies show that stock market investors today are younger, increasingly diverse and, importantly, more representative of the broader U.S. population in terms of income.

The structure of our vibrant and liquid equity market benefits investors and issuers alike. Yet, the SEC recently issued several proposals that would dramatically restructure U.S. equity market structure and potentially undermine the recent expansion of market access and the financial benefits that investors enjoy today. The one proposal SIFMA supports is the change to Reg NMS Rule 605, which would update the data that measures market quality for everyday individual investors.

Rule 605 has not been substantively updated since its adoption in 2000. SIFMA believes this is a natural starting point for the path forward.

Instead of rushing to finalize all four rules at the same time, the SEC should first update Rule 605 to obtain the baseline data needed to accurately assess market quality. Then, after analyzing the new data, determine whether more rulemaking is needed and conduct robust economic analysis to ensure any changes benefit all investors.

For more on this important issue, visit https://www.sifma.org/equity.