Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, released the following statement in response to the Securities and Exchange Commission’s (SEC) December 14, 2022 rule approval and proposals.

“I am pleased that the Securities and Exchange Commission has adopted rules that incorporate the recommendations from my bill, H.R.1528 “Promoting Transparent Standards for Corporate Insiders Act,” which passed the House with bipartisan support and requires the SEC to stop company executives and others from hiding insider trading through 10b5-1 trading plans. These plans permit certain employees of publicly traded corporations to sell their shares without violating insider trading prohibitions, but several high-profile examples have suggested that current rules are too lax. Like my bill, the action by the SEC—under the leadership of Chair Gary Gensler—would limit the abuses and misuses of 10b5-1 plans. I look forward to continue working with the SEC to further build on the Committee’s efforts to promote transparency and competition, strengthen market integrity and protect investors, as today’s other market structure proposals would.”

BACKGROUND:

The SEC also approved several proposals that Chairwoman Waters has advocated for to strengthen market structure, increase competition and further protect investors, including:  

• SEC-established Best Execution Standard: Under this standard, broker-dealers would be required to find the best market and the most favorable price for the security to trade on behalf of the investor. An SEC-established “best execution” standard is long-overdue, and the detailed Committee investigation found that while investors are owed “best execution” under FINRA rules, they often don’t receive it. 
  
  
• Disclosure of Order Execution Quality: The Commission also proposed to enhance the disclosures regarding quality of order execution that certain securities trading facilities and brokers would need to make. These enhancements would increase transparency into order execution practices that would lead to investors making more informed decision in their selection of brokers. This issue was explored through the three full Committee hearings that the Chairwoman convened during the Robinhood and Citadel events.
  
  
• Increasing Competition for Retail Orders: The Commission also proposed an Order Competition Rule, which aims to enhance competition for the execution of marketable orders of individual investors.  It would require certain orders of individual investors to be exposed to competition in fair and open auctions before they could be executed internally by trading centers.  The proposal to increase competition for retail investors’ orders is innovative and badly needed. The Committee’s investigation found that the execution of retail orders are concentrated among two entities. This proposal should inject needed competition. 
  
  
• Tick Sizes and Exchange Access Fees: Among other ideas, the Commission also proposed to amend the minimum pricing increments listed on a national securities exchange. During the March 30, 2022 Subcommittee hearing entitled, “Oversight of America's Stock Exchanges: Examining Their Role in Our Economy” the Chairwoman spoke about the need to reform the stock exchanges and ensure that stock exchanges can fairly compete with alternative trading centers.  Today’s proposal would level the playing field between stock exchanges and ATSs in favor of investors.
  
  

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