SEC Chairman Gensler to Speak on Order Flow Payment and Crypto at House Hearing

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Securities and Exchange Commission Chairman Gary Gensler will answer questions from members of the House Financial Services Committee on a range of topics from market structure to cryptocurrency regulation in a hearing starting at noon Tuesday, Eastern time.

We are fortunate to have the largest, most sophisticated and most innovative capital markets in the world, Gensler will say, according to prepared remarks. However, we cannot take our remarkable capital markets for granted. New financial technologies continue to change the face of finance for investors and businesses. More retail investors than ever are accessing our markets. Other countries are also developing deep and competitive capital markets.

Gensler plans to tackle the controversial practice of payment for order flow in the stock market, whereby retail brokers sell market makers the privilege of executing their clients’ orders. In his scheduled testimony, Gensler will discuss conflicts of interest in the practice. Supporters of payment for order flow argue that it has helped lower trading costs and supports the commission-free trading business model.

Lawmakers will likely also address the subject of cryptocurrency regulation. Currently, we just don’t have enough investor protection in crypto finance issuance, trading or lending, according to Gensler’s testimony.

Republicans have become increasingly critical of Gensler’s approach to the crypto market, arguing the agency should do more to clarify regulations on the subject, while Democrats have generally voiced their support. concerns that the industry is flouting securities laws.

Gensler also plans to address the SEC’s policy regarding listings of Chinese companies on US stock exchanges, most of which do not allow the Public Company Accounting Oversight Board to oversee their audit process, unlike US law. New legislation passed last year requires such companies to be banned from U.S. stock exchanges if they fail to comply within three years.

The regulator also plans to advocate for more resources. He will note that the SEC Enforcement Division has 6% fewer staff than in 2016, and that the staff of the Examinations Division has remained stable despite a 20% increase in registered investment advisers and an increase. 65% of the assets under management of these companies. .

As our financial markets have grown and technology continues to shape the face of finance, however, the SEC has not grown to meet the needs of the 2020s, Gensler testified. As more Americans gain access to capital markets, we need to make sure the commission has the resources to protect them.

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