by Jim Toes
President & CEO, STA

SEC Commissioner Hester Peirce delivered a thought-provoking speech on equity market structure at the 12th Annual Conference on Financial Market Regulation. At the outset, she highlighted the organic nature of market development and cautioned against the pitfalls of overly prescriptive regulation. She then posed a series of introspective questions that included:

“What would the market landscape look like without micromanagement by the SEC? Would the proliferation of exchanges be the same? How would off-exchange trading platforms, like ATSs, have evolved? Would trade internalization be as prevalent? Most importantly, would these changes benefit issuers, investors, and traders?”

In just over 3,000 words, Commissioner Peirce walks us through 75 years of equity market structure, culminating in astute observations on its nuanced and defining attributes. She examines critical aspects on areas where the Commission may consider making changes such as the Order Protection Rule, competitive constraints on exchanges, the expansive definition of an exchange’s “facility,” the SRO model, overlooked issues in options markets and more. She advocates for adaptive regulatory frameworks that accommodate technological advancements and market dynamics, while ensuring investor protection and market integrity.

Overall, Commissioner Peirce’s speech is balanced and insightful, underscoring a commitment to reevaluating regulatory approaches to better align with economic principles and market realities—ultimately aiming to foster competitive, transparent, and resilient financial markets. It is clear that the Commissioner known affectionately as “Crypto-Mom” is also an “Equity-Mom” and her speech serves as a strategic guide for potential regulatory changes. It is well worth the read. 

Horses and Bourses: Remarks at the 12th Annual Conference on Financial Market Regulation