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Remarks at the Equity Market Structure Advisory Committee Meeting

Commissioner Michael S. Piwowar

Aug. 2, 2016

Good morning and welcome.

Let me start by thanking the members of the Equity Market Structure Advisory Committee (the “Committee”), especially those of you serving on the Market Quality and Customer Issues Subcommittees, for all of your efforts. It is obvious that the recommendations being presented today are the result of considerable thought and analysis.

At earlier meetings, I have encouraged the Committee to follow its own agenda and establish for itself goals and metrics for achieving success. I hope you will continue to do so, and I have no intention of interfering. I do, however, want to raise an issue with respect to the framing of one of today’s discussion topics.

On the Committee’s webpage, the Customer Issues Subcommittee’s stated objective is to “consider initiatives to protect investor interests and promote investor confidence.”[1] In furtherance of that endeavor, one of the Subcommittee’s recommendations to be considered and discussed at today’s meeting is that the SEC benchmark and monitor investor confidence in U.S. equities market structure to inform rulemaking and educational efforts.

I have previously challenged the notion that the Commission should “promote investor confidence,” because it is not part of our core mission and is a nebulous concept. And, most importantly, focusing on investor confidence creates the wrong incentives.[2] Quite the opposite of promoting investor confidence, I believe the Commission should be encouraging a healthy dose of investor skepticism in order to fulfill our investor protection mandate. We should urge investors to ask questions about, for example, how their orders are treated and whether that is consistent with their personal investment goals and decisions. Self-reliance, in situations where investors are empowered with material information, can be a more powerful protection than government dependence.

Nonetheless, the Subcommittee’s recommendation regarding investor confidence has embedded within it concepts of which I have been a great proponent. Specifically, it is suggested that the SEC test the usability, clarity, and effectiveness of disclosures on investors, and that investor educational materials should themselves be tested and revised accordingly. I completely agree. In my first public speech as a Commissioner, I called on the Commission to commit itself to a robust investor testing program that examines the efficacy of not only proposed rules, but our existing rules as well.[3]

In my mind, the investor testing contemplated in the Subcommittee’s recommendation would be valuable not because it could improve investor confidence, but because it could facilitate investors making informed choices about investment venues, strategies, and products. Such is a key to the Commission fulfilling our investor protection mandate.

Again, I congratulate the Committee for its achievements to date, and I look forward to what comes next. Finally, I extend a special thank you to the distinguished panelists and the SEC Staff for your contributions to today’s event.

[1] See Equity Market Structure Advisory Committee — Subcommittees, available at (emphasis added).

[2] See Commissioner Michael S. Piwowar, Capital Unbound: Remarks at the Cato Summit on Financial Regulation (June 2, 2015), available at

[3] See Commissioner Michael S. Piwowar, Remarks to the Los Angeles County Bar Association Securities Regulation Seminar (November 22, 2013), available at

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