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SEC Proposals: Market Structure

March 24, 2023

The Securities and Exchange Commission has proposed four separate rulemakings related to market structure. The public comment period concludes on March 31.

Among these are Proposed Regulation Best Execution, which would establish through Commission rules a best execution regulatory framework for brokers, dealers, government securities brokers, government securities dealers, and municipal securities dealers. (Video)

I believe a best execution standard is too important, too central to the SEC’s mandate to protect investors, not to have on the books as Commission rule text.

SEC Chair Gary Gensler on Proposed Regulation Best Execution

While a best execution rule was first established in 1968 by the National Association of Securities Dealers, the predecessor to the Financial Industry Regulatory Authority, the proposed rule, if adopted, would create the first SEC-established rule concerning best execution. Read More | Video

The Commission also proposed a rule that would require certain orders of individual investors to be exposed to competition in fair and open auctions before such orders could be executed internally by any trading center that restricts order-by-order competition. Read More

Another Commission proposal would amend certain rules under Regulation NMS to adopt variable minimum pricing increments, or “tick sizes,” for the quoting and trading of NMS stocks, reduce access fee caps for protected quotations, and accelerate the transparency of the best priced orders available in the market. The proposed amendments are designed to enhance trading opportunities for all investors and to help ensure that orders placed in the national market system reflect the best prices available for all investors. Read More

The Commission also proposed amendments that would update the disclosure required under Rule 605 of Regulation NMS for order executions in national market system stocks, which are stocks listed on a national securities exchange. The proposal aims to increase transparency for investors and facilitate their ability to compare brokers.  Read More

Public Comment

All four of these proposals have been issued for public comment. Visit the SEC's proposed rules webpage for links to submit comments on particular proposals.

Webcast

A webcast is available of the December 14 open meeting at which these items were proposed:
Part 1 | Part 2

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