SEC Commissioner Piwowar Delivers Remarks Regarding a Comprehensive Review of Equity Market Structure
SEC Commissioner Michael S. Piwowar delivered remarks at a London conference, stating that, in order to maintain fair, orderly, and efficient markets, the SEC must conduct a comprehensive review of equity market structure.
Commissioner Piwowar noted that, in 1961, Congress mandated that the SEC undertake the study and investigation of the adequacy of rules of national securities exchanges and national securities associations. This resulted in a 19-month analysis and a five-part report titled "Report of Special Study of Securities Markets of the Securities and Exchange Commissioner." The study revealed that the market is a complex interaction of "causes and effects" among numerous stakeholders. Piwowar found it troubling that the SEC has still not conducted a comprehensive review of market structure in light of the 2010 flash crash. He went on to state that the SEC has "effectively abandoned its Concept Release on Equity Market Structure" that was published for public comment in early 2010. He noted that, as the market swiftly evolves, the SEC's regulatory structure must evolve with the market in order not to conflict with how markets operate.
Furthermore, Piwowar noted, the way in which the 1961 study was conducted can serve as a useful framework for the current market structures to be analyzed. Piwowar explained that the study was the result of broad participation, not only by SEC staff, but also including input from individuals in private law practice, academia and the industry. Piwowar said that, moving forward, the SEC should obtain this broad input to try to determine the incentives that underlie the current market structure. Finally, he stated, the views and perspectives of the public are essential for any market structure debate, and the SEC will benefit the most from data and research.
In closing, Commissioner Piwowar stated that the SEC needs a comprehensive, multi-year equity market structure review program, with "the benefit of hindsight and the promise of foresight."