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Opening Remarks at the Equity Market Structure Advisory Committee Meeting

Chair Mary Jo White

Nov. 29, 2016

Good morning and welcome, everyone, to today’s meeting of the Commission’s Equity Market Structure Advisory Committee.  The full Committee will consider several revised recommendations from the Market Quality and Customer Issues subcommittees, including on issues related to market-wide volatility moderators and broker-dealer order handling transparency.  An earlier version of these recommendations was presented at the Committee’s meeting on August 2, 2016.  At that time, I gave detailed remarks on most of the subjects to be covered today, and the Committee engaged in a thorough discussion, with the participation of expert panelists.  I will not repeat those remarks today, but do look forward to the full Committee’s consideration of the revised recommendations.

In a moment, I will turn to Steve Luparello to introduce these items.  But first, I would like to take this opportunity to very briefly reflect on this Committee’s work during its nearly two-year term, which was scheduled to expire in February 2017.  As I arrived at the SEC in early 2013, it was clear that equity market structure, including a comprehensive review of the current regulatory regime, must be a top and ongoing priority for the Commission.  And establishment of this Federal Advisory Committee was a critical component of that effort and the determination to have maximum useful input on the range of issues that are necessary for us to review, consider and re-consider.

As reflected in its broad-based charter, this Committee was formed to provide diverse and comprehensive perspectives on the structure and operations of the U.S. equity markets, as well as advice and recommendations on equity market structure.  The members of this Committee set about very productively and knowledgeably performing that important function, and continue to tackle the core equity market structure questions.  Including those taken up today, the Committee will have considered substantial recommendations from each of the four subcommittees.  Through the efforts of the Regulation NMS subcommittee, the full Committee has thus far already considered critical aspects of Regulation NMS and provided the Commission with a framework for an access fee pilot that could further inform future Regulation NMS policy choices.  With the assistance of the Trading Venues Regulation subcommittee, the Committee has reviewed, among other things, the current NMS governance framework, with a focus on striking a balance between the needs of NMS plan participants and members of NMS plan advisory committees.

The Customer Issues subcommittee has led efforts aimed at promoting the Commission’s understanding of investor confidence and enhanced transparency for investors regarding broker-dealer order handling practices.  And the Market Quality subcommittee has initially focused on refining critical market-wide mechanisms that protect our markets against extraordinary volatility.  We will hear further from both of these subcommittees today.  The full Committee’s work and recommendations have been, and will continue to be, invaluable to the Commission, as we seek to optimize our equity market structure.

As we begin the transition process to new leadership at the Commission and to having a full Commission, we need to ensure continuity of all of the agency’s many functions and responsibilities to protect investors, promote fair, orderly and efficient markets, and facilitate capital formation.  As we do so, no one questions that equity market structure will continue to be a major focus for the Commission or the value of this Committee’s contributions.  Yesterday, the Commission unanimously voted to renew this Committee’s charter for six months with the current membership.  This renewal enables the next Chair and the next Commission to benefit seamlessly from this vital resource for our ongoing assessment of equity market structure issues and potential changes and enhancements.

I want to thank each of you again for your continued willingness to serve on the Committee, which the staff has recently confirmed, and for your dedication to both the work of the Committee and the mission of the SEC.  Before I turn the meeting over to Steve Luparello to introduce the agenda items, I want to say a couple of words about Steve and my gratitude for his service as our Director of Trading and Markets.  And while I won’t repeat all of the nice things I said about him in the press release announcing his departure by the first of the year, I do want the public generally to know what this Committee and market participants who have dealt with Steve know well:  investors and our markets have been extraordinarily well-served by Steve’s knowledgeable and steady hand and as the leader of the Commission’s efforts to enhance our equity market structure.  In addition to being the lead Commission advisor for this Committee, Steve has also been a thought-leader on critical policy initiatives, including Regulation Systems Compliance and Integrity (SCI), the national market system plan to create a consolidated audit trail, and the proposed enhancements to the regulation and transparency of alternative trading systems and disclosures to investors concerning broker-dealer order handling practices.  Needless to say, Steve continues to be a tremendous asset to the Commission and its mission, and he will be sorely missed when he leaves.  Thank you, Steve.

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