SEC looking to 'freshen' trading rules to ensure orderly markets: official

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US securities regulators are examining ways to update trading rules, including how assets are priced, to ensure they keep up with current technology, the head of the Securities and Exchange Commission said Wednesday.

"I believe it's appropriate to look at ways to freshen up the SEC's rules to ensure that our equity markets reflect our mission: to maintain fair, orderly, and efficient markets, while ensuring we protect investors and facilitate capital formation," SEC Chair Gary Gensler said in a speech.

"The question is whether our equity markets are as efficient as they could be, in light of the technological changes and recent developments."

Gensler referenced the growing use of trading apps, including Robinhood, the platform behind the stunning rise in recent months of shares like GameStop, driven by social media and retail investors.

Meanwhile most trades are executed by wholesalers which have a price advantage compared to exchanges like Nasdaq or the New York Stock Exchange, he told the Piper Sandler Global Exchange and Fintech Conference, which is closed to the public.

Traditional exchanges handle only about 53 percent of trading volume, while wholesalers manage over a third, with a single firm claiming to handle half of all retail volume, Gensler said.

That concentration gives some players an advantage over others, and results in a worse deal for investors.

"I've asked staff to make recommendations for the Commission's consideration on best execution," of rule changes including for on-exchange and off-exchange trading, and minimum pricing increments "with the aim of continuing to make our markets as efficient as possible," he said.

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