Letters

SIFMA Letter to SEC on Near-Term Priorities

Summary

SIFMA provides letter recommending the SEC move forward on addressing access fees, potentially by proposing a pilot program, adopt the SEC’s outstanding rulemaking proposals on transparency and disclosure, and extend the term of the EMSAC. SIFMA recommends the SEC act as promptly as possible on these issues so attention can be turned to a review of Regulation NMS and SIP reform.

PDF

Date

5

December

2017

Excerpt

December 5, 2017

Via Electronic Mail

The Honorable Walter J. Clayton
Chairman
U.S. Securities & Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-1090

Re: Action on Equity Market Structure / Near-Term Priorities

Dear Chairman Clayton:

The Securities Industry and Financial Markets Association (“SIFMA”)1 submits this letter to the Securities and Exchange Commission (“Commission”) as part of SIFMA’s continuing advocacy on equity market structure. For many years, SIFMA and its members have been vocal advocates and thought leaders on equity market structure issues. The U.S. equity markets are the deepest, most liquid and most efficient in the world, with investors enjoying extraordinarily low transaction costs, narrow spreads, fast execution speeds and, for retail investors, ample opportunities for price improvement. Nevertheless, SIFMA and its members continuously consider and analyze the legal, commercial and policy issues around equity market structure, and we believe equity markets can benefit from enhancements to reflect the changing nature of the markets. In 2014, SIFMA’s Board of Directors convened a broad-based task force of members from across the country and across the industry, including retail and institutional dealers and asset managers, to develop a series of tangible and actionable market structure reforms. Earlier this year, in response to a public request by then-Acting SEC Chairman Michael Piwowar pursuant to the Regulatory Flexibility Act, SIFMA submitted comments2 suggesting a review of Regulation NMS under the Securities Exchange Act of 1934 (“Exchange Act”).

SIFMA has been joined recently by other commentators in examining equity market structure, which have issued constructive and actionable recommendations for addressing current issues in equity market structure. Those commentators include the following:

• In 2015, the Commission established the Equity Market Structure Advisory Committee (“EMSAC”). The EMSAC has been extremely effective in providing industry perspective and input to the Commission on critical equity market structure issues.

• In July 2016, the Committee on Capital Markets Regulation (“CCMR”) – an independent and nonpartisan research organization dedicated to improving the regulation of U.S. capital markets – issued a report on the U.S. equity markets, also with specific recommendations on equity market structure.

• In October of this year, the U.S. Department of the Treasury (“Treasury Department”) issued a comprehensive report on capital markets policy with specific recommendations on equity market structure and regulatory structure and process, among other topics.

SIFMA hopes that your tenure as Chairman of the Commission will include a comprehensive review and modernization of the regulations and policy governing the U.S. equity markets. As we urged in our March 2017 letter, the Commission should address major issues such as SIP reform and a review of Regulation NMS. SIFMA looks forward to engaging with the Commission on these important issues.

A comprehensive review of Regulation NMS will require a great deal of the SEC’s resources and attention as well as that of a broad range of market participants. Accordingly, and with the acknowledgment that there are a number of existing priorities and obligations on your regulatory agenda, we encourage the Commission to act as promptly as possible on the most critical among them so that appropriate attention can be turned to a review of Regulation NMS. As addressed in this letter, the Commission should move forward on addressing access fees, potentially by proposing a pilot program, adopt the Commission’s outstanding rulemaking proposals on transparency and disclosure and extend the term of the EMSAC.

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1 The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks, and asset managers. SIFMA’s mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 See Letter from SIFMA to Brent Fields, “Notice of Meeting of Equity Market Structure Advisory Committee Meeting; List of Rules to be Reviewed Pursuant to the Regulatory Flexibility Act” (March 29, 2017) available at https://www.sec.gov/comments/265-29/26529-1674696-149276.pdf (“SIFMA March 2017 Letter”).