The Capital Markets, Securities and Investment Subcommittee held a hearing today to examine the current state of the U.S. equity markets—specifically what is working well in today’s markets, as well as areas that need improvement or are impacting the optimal functioning of the markets.
“The U.S. equity markets are widely recognized for being the deepest, most liquid, and most competitive markets in the world. However, it doesn’t mean that these markets are perfect and that there is no room for improvement. That is why a truly comprehensive review of equity market structure is long overdue,” said subcommittee Chair Bill Huizenga (R-MI). “In order to move markets forward, we need to know where they’ve been. Today’s hearing was an important first step in doing just that.” To watch Chairman Huizenga's entire opening statement, click on the video below.
Key Takeaways from the Hearing:
Despite significant technological advancements and constantly evolving industry practices in today’s market, the statutory framework that governs equity market structure remains largely unchanged.
In order to determine what is the appropriate statutory framework to represent today’s markets and – more importantly – to build in sufficient flexibility that will allow our markets to continue to evolve and allow innovation, we must first analyze how the equity markets have evolved, what is working, and what needs to be improved.
Topline Quotes from Witnesses:
“In many ways, today’s markets bear little resemblance to those of just a decade ago. The old images of brokers fielding telephone calls and floor traders hollering orders has long since given way to a profoundly interconnected, technology-driven marketplace that transacts across an astonishing array of exchanges and trading venues… Yet, as markets have advanced, the fundamental structure that underpins them has not evolved to benefit all markets segments equally.” - Tom Wittman, EVP and Global Head of Equities, NASDAQ
“Overall costs to investors in the U.S. equity marketplace have fallen and are among the lowest in the world, and market quality and reliability continue to improve. Retail customers now have low-cost, immediate access to our markets with exceptional execution quality. However, Regulation NMS has also contributed to some unintended consequences throughout the marketplace. Regulation NMS has created a complex and fragmented market, which may increase costs for some market participants.” - Chris Concannon, President and COO, Chicago Board of Options Exchange
“The United States has the largest percentage of individual investor participation and the deepest and most liquid markets in the world. As stakeholders and policymakers debate possible changes to our market structure, it is critical to remember how efficient and resilient our markets are to the benefit of retail investors that Charles Schwab and others serve every day. That being said, the evolution we have seen has created odd incentives and antiquated systems and everything should be on the table for review.” - Jeff Brown, SVP, Legislative and Regulatory Affairs, Charles Schwab
“All issuers and investors, large and small, should have access to the bounty of the capital markets. On behalf of the NYSE’s listed companies and investors, we encourage right-sized regulation for our capital markets system.” - Thomas Farley, President, New York Stock Exchange
Earlier today, I introduced the Family Reunification Act. This legislation would require the federal government to reunite children that had been recently separated from their parents at the southern border. For years, partisan bickering has prevented meaningful immigration reform from being achieved. It is my hope that by reuniting children with their parents, the Family Reunification Act will build bipartisan momentum for solutions that strengthen border security and reform our outdated immigration system. You can read the text of the legislation here https://huizenga.house.gov/uploadedfiles/6.21.18.huizenga.reunification.legislation.pdf
The Administration must end the policy of separating children from their families immediately. If the Administration is unwilling to do so, then the House should immediately pass narrowly tailored legislation to end separations. While there are divisions on other areas of immigration, there is broad bipartisan support to put an end to this inhumane policy.
What is happening at the border is heartbreaking. I'm committed to leading a bipartisan, bicameral effort to find a humane solution that ends automatic separations and keeps families together. I have reached out to both Republican and Democrat offices in search of a workable bipartisan solution.
I am encouraged by the pro-active changes being made to the legislation that addresses family separations, DACA, and border integrity being considered by the House this week. Tonight’s meeting with President Trump provides an opportunity to work toward modernizing our immigration system and providing resolution to the crisis along the southern border.
The United States is a nation of laws, but it is also a nation of compassion. It’s clear the catch and release policy implemented by the previous Administration failed to stem the tide of people entering the country illegally. While changes in policy are necessary, the notion of automatically separating families runs counter to my values as a father as well as the core values of our nation. We must find a legislative solution that balances our compassion with the fact that some individuals are exploiting loopholes in our immigration system and actively trafficking children across the border. This week the House is scheduled to address the issue of border integrity, DACA, and family separation. There is an opportunity to have a workable bipartisan solution if we can stop the partisan bickering and actually put our nation first.