SEC Seeks Ideas to Boost Stock Market Quality in New Initiative

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By Andrew Ramonas

The SEC is looking to hear how to improve equity market structure in a series of roundtable discussions this year, agency Chairman Jay Clayton said April 10.

The Securities and Exchange Commission’s first talk will focus on the market for small companies with thinly traded stocks April 23, Clayton said in remarks at a Security Traders Association and University of Chicago Booth School of Business symposium in Chicago. Other discussions will center on investor access to markets and market data, and fighting retail fraud, including in the cryptocurrency space, he said.

The new initiative will help the SEC see what rulemaking the agency may need to consider, Clayton said. The commission will use the sessions to review suggestions from its Equity Market Structure Advisory Committee, the Treasury Department’s capital markets report on streamlining regulations, and other sources, he said. The SEC will invite people to speak at the talks and accept submissions from the public about the topics discussed, the chairman said.

“Many of the issues that I have touched on today are complicated, and will be challenging to address,” Clayton said. “But these challenges are our opportunities. The time is right to take stock of the universe of information, data, and perspectives.”

Brett Redfearn, director of the SEC’s Division of Trading and Markets, said at the same event that he expects a pilot program that lets some small-cap stocks trade at wider increments to end as scheduled in October, drawing some applause.

The “tick size” pilot, which applies to companies with $3 billion or less in market capitalization, seeks to determine whether market quality and liquidity in small-cap securities would improve under changes tested in the program.

“This is an example of a pilot that has the ability to provide us with much useful data, but also one that may demonstrate that a policy solution worth exploring is not necessarily a policy solution that makes sense for the long haul,” Redfearn said.

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