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Clayton Seeks Review of Equity Market Structure Rules

In a recent speech delivered with Division of Trading and Markets director Brett Redfearn, SEC Chairman Jay Clayton marked the completion of equity market structure initiatives adopted in 2018 and called for a major review of the equity trading regulatory framework. The agency has undertaken a transaction fee pilot to generate data to assess whether the rules governing exchange access fees continue to promote fair, orderly, and efficient markets; efforts toward greater transparency of broker order routing practices; and improving the transparency of trading systems. Clayton noted that there currently is a “two-tiered system of market data and market access in the U.S. equity markets.” He observed that the proprietary data products and access services that the major exchanges sell to the marketplace tend to be “faster, more content rich, and more costly” than the consolidated public data feeds jointly operated by the major exchanges and Finra. The Wall Street Journal reported that any SEC move toward shaking up the current system would be applauded by brokers and investors and contested by the major stock exchanges, which have sued the SEC in opposition to the transaction fee pilot. Meanwhile, Pensions & Investments reports that U.S. stock exchanges have selected Finra as plan processor for the consolidated audit trail, a database for all equity and options trades executed on their platforms. The contract of the project's original plan processor, Thesys CAT, was terminated in February.

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