Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, January 13, 2010

SEC Issues Concept Release on Structure of Equity Markets

The SEC is undertaking a review of the structure of equity markets and voted to issue a concept release seeking public comment on such issues as high frequency trading, co-locating trading terminals, and markets that do not publicly display price quotations.  The SEC's announcement explains that:

The U.S. equity markets have undergone significant change in recent years from a market structure that relies on people shouting on the exchange floors to one that relies on advanced computer technology. The speed of trading has accelerated from seconds to milliseconds to microseconds. Trading volume has expanded, and new trading centers have entered the markets and captured a significant share of volume. Liquidity is now dispersed among many different venues, and these venues offer a complex array of order types and other trading services.

In conducting this review, the Commission seeks to ensure that the current market structure serves the interests of long-term investors willing to accept the risk of equity ownership over time and are essential for capital formation. These investors include individuals who invest directly in equities, as well as retirement plans and other institutional investors that invest on behalf of many individuals.

The release requests comment on all matters related to market structure. In addition, it asks many specific questions about the current market structure.

The Commission intends to use the public's comments on the concept release to help determine whether additional regulatory measures are needed to improve the current equity market structure. Public comments on the concept release must be received by the Commission within 90 days after its publication in the Federal Register.

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