Wall Street pushes back against SEC stock market reforms

6:18 pm Monday, March 06th, 2023

By John McCrank

NEW YORK (Reuters) -The New York Stock Exchange teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities on Monday to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.

The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.

“We are deeply concerned that the Commission has simultaneously issued multiple far-reaching proposals that would dramatically overhaul current market structure without adequately assessing the cumulative impact on the market or the potential for unintended consequences,” the companies said in an SEC comment letter.

The SEC in December proposed requiring nearly all retail stock orders to be sent to auctions, as well as a new standard for brokers to show they get the best possible executions for their clients’ orders. The SEC also proposed lower trading increments and access fees on exchanges, and more robust retail order execution disclosures.

The aim of the proposed rules is to improve market quality and efficiency, by boosting competition for retail stock orders and reducing unnecessary intermediation, SEC Chair Gary Gensler has said.

The NYSE, along with Schwab and Citadel Securities, asked the SEC to indefinitely withdraw the auction and best execution proposals, saying they could lead to less market liquidity and create confusing regulatory overlap.

“We believe that this more targeted approach will result in significant benefits for U.S. equity market participants, while meaningfully reducing the risk of negative outcomes for markets and investors, including the risk of firms retreating from being liquidity providers – which would be particularly detrimental to retail investors,” they said.

The SEC will review all comments submitted during the open comment period, and generally responds to comments received as part of the final rule-making and not beforehand, a spokesperson for the agency said.

(Reporting by John McCrank; Editing by Angus MacSwan and Lincoln Feast.)