SEC Commissioner Stein Discusses SEC Priorities to Improve Market Efficiency

At a conference sponsored by the Council of Institutional Investors, SEC Commissioner Kara Stein spoke about ways in which the SEC can make the markets more efficient by better informing and empowering investors.

Commissioner Stein stated that federal securities laws are based on the premise that an informed investor is the key to robust and efficient markets, noting that evaluating disclosure requirements is one area where the SEC needs to reexamine its current practices. In doing so, she stated, the SEC should not focus on removing redundancies and outdated disclosures. Instead, it should focus on creating better, timelier and more relevant disclosure practices for investors.

Commissioner Stein explained that investors need not only to be informed, but also to be "empowered." She said that the SEC must examine the "shareholder voting franchise" to ensure that "basic principles of corporate democracy are supported." She also stated that it might be time "to take a hard look at our process for evaluating issuer no-action requests to exclude shareholder proposals," since both issuers and shareholders need more clarity and consistency as to which proposals are appropriate under SEC rules.

Finally, Commissioner Stein discussed the ways in which modern markets operate, with particular emphasis on high-frequency and/or algorithmic trading. She explained that while a vast majority of rules that govern modern markets focus on the interactions between individuals, this approach is becoming outdated. This transition, she stated, should be a catalyst for regulators to review "comprehensively" how markets work. Specifically, Commissioner Stein stated that the SEC's efforts should focus on routing practices and how lit and dark markets interact.

See: Commissioner Stein's Speech.

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