Prepared Remarks before the 10th Annual Conference on Financial Market Regulation

Good morning. It is a pleasure to welcome you to the second and final day of the 10^th Annual Conference on Financial Market Regulation.

My thanks to the Center for Financial Services at Lehigh University, the Center for Financial Policy at the University of Maryland, the Chartered Financial Analyst (CFA) Institute, and of course the staff of the SEC’s Division of Economic and Risk Analysis.

Economic analysis is critical to all we do at this agency. It informs our policy and rulemaking. It is critical to our enforcement work. It plays an important role in our day-to-day monitoring of markets and risks.

This might seem natural to you since we oversee the $100 trillion capital markets. Carrying out our agency’s mission requires a mixture of skills – accounting, legal, policy, technology, and so on. But at our core, economics is really important to everything we do. For most of the decision-making at the SEC, the economists are seated at the table.

It’s also important that our work is informed by economic research outside of our agency. This conference is part of that.

The need for ongoing discussion goes beyond the two days and many topics of this conference. I encourage all of you in the audience to engage, engage, engage. We benefit from that formal as well as informal engagement, from the letters in our rulemaking files to the meetings with the professional staff and the Commissioners.

Let me just turn for a moment to discuss our three-part mission. It’s about investors: protecting those investors. It’s about issuers: technically, facilitating capital formation. It’s also about the markets in the middle: technically, fair, orderly, and efficient markets. The essence of what we do is make sure that the markets work for investors and issuers alike—not the other way around.

You all are economists: You understand how incentive systems work. Intermediaries have incentives to capture rents. So a lot of what we do is focused on efficiency and competition—and the use of transparency and the tools of fair access to promote those ends.

That’s where you, as economists, come in. You help us think about these market structures and these models, particularly in an ever-changing technological landscape.

Before I close, I want to take a moment to commend the Division of Economic and Risk Analysis.

We have a terrific team of around 160 people, led by a world-class economist in Jessica Wachter. We also have another world-class economist, Haoxiang Zhu, running our Division of Trading and Markets. We’re so honored that they’re willing to lend their experience and intellect to this agency.

Now, onto the presentations. Thank you.