The U.S. Securities and Exchange Commission has launched a comprehensive review of stock trading regulations, with potential reforms aimed at modernizing market infrastructure and addressing challenges arising from technological advancements since 2005. The initiative, announced in 2019, follows years of evolving trading dynamics including high-frequency trading and fragmented liquidity.
The review focuses on improving access to trading data for investors, accelerating public market data feeds, and restricting cross-exchange trading for thinly-traded securities. These measures seek to enhance transparency and reduce costs for brokers navigating algorithmic trading demands, according to agency officials.
Regulation National Market System, implemented in 2005 to ensure retail investors receive optimal trade prices, has faced new challenges as electronic exchanges and algorithmic trading have reshaped market conditions. SEC Chairman Jay Clayton emphasized the need for updated regulations during a 2019 event, citing significant changes in market structure over the past decade.
Proposed reforms include enhancing disclosure requirements for reverse mergers, adjusting quote sizes for high-priced stocks, and limiting trading venues for illiquid securities. The review builds on 2018 efforts that expanded transparency around broker-dealer order routing and tested restrictions on exchange rebate programs.
A March 2019 photo accompanying the report showed traders at the New York Stock Exchange, highlighting the ongoing debate over market structure modernization. The SEC's work reflects continued scrutiny of trading frameworks in an era of rapid technological change.
