Equity Market Structure Roundtable Debrief

Perspectives and Key Themes from Market Participants

Recently, SIFMA hosted our second Equity Market Structure Roundtable to discuss the four SEC proposals released last December. The event brought together viewpoints from the buy-side, sell-side, exchanges, academics, and others, as well as an update from the SEC’s Chief Economist and Director of Division of Economic and Risk Analysis (DERA). Inside this note, we recap just some of what was seen and heard, including:

The SEC Viewpoint

“The economic perspective is very important at the SEC.” The guidance drives the economic analysis, a process that is “highly collaborative” with the rule writing division. Economists fill in the pieces of the baseline (current state) and then add in the cost-benefit analysis to reach a conclusion.

The Market Viewpoint

  • Overall: Prefer a staggered gradual approach, with an updated Rule 605 the baseline. Doing all proposals at once could bring unintended consequences.
  • Disclosure of Order Execution Information: Proposal could create confusion for investors. Panelists pondered two reports – one simple form for investors and a deeper dive for the industry.
  • Tick Sizes, Access Fees, & Transparency of Better Priced Orders: Be conservative, take a narrow approach. The more complex you make the system, the more you could erode investor trust.
  • Regulation Best Execution: Proposal could negatively impact market efficiency and resiliency. Panelists do not see the need for a second best ex rule when the current rule works.
  • Enhancing Order Competition: Proposal could increase costs to the industry and investors, as well as degrade the customer experience for both retail and institutional investors.




SIFMA Insights
Katie Kolchin, CFA
Managing Director, Head of Research