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SEC chair discusses opportunities for 2014

  • Speech — gray Image

Jan 28, 2014

SEC Chair Mary Jo White gave a speech yesterday at the Securities Regulation Institute in Coronado, California. She discussed how the SEC continues to adapt to emerging technologies, ever-evolving markets, and other transformative industry changes. She also discussed some of the Commission's priorities for the coming year.

Ms. White acknowledged that the continuous advances in technology have hand a tremendous impact on the securities markets and spoke about some of the transformative changes the SEC has made to keep up, while continuing to carry out the agency's mission to protect investors and ensure markets are operating fairly:

  • NEAT — The SEC uses its "National Exam Analytics Tool" to access and systematically analyze vast amounts of trading data. It can identify signs of possible insider trading, front-running, window dressing, improper allocations of investment opportunities, and other kinds of misconduct.
  • MIDAS — The "Market Information Data Analytics System" collects one billion records of trading data daily. The SEC posts the aggregated data and analyses on the market structure section of its Web site.
  • Operational integrity — The SEC is also interested in making sure that exchanges and other market participants strive towards zero errors and no interruptions in the markets. Ms. White expects that the SEC's 2014 agenda will include consideration of the adoption of Regulation SCI, which would provide new, stricter requirements for the use of technology.

Ms. White also discussed how the SEC is evolving with new financial products, like the emerging over-the-counter derivatives market. She explained how the SEC is creating a new "regulatory regime" for this market in an effort to make it more transparent. She also talked about money market reform and the need to address heightened redemption risk since the financial crisis. Two proposals were issued in June 2013, and issuing a final rule is a "critical priority" for the Commission.

Ms. White touched on changes in how capital is raised; she talked about general solicitation rules, crowdfunding, and Regulation A. She also elaborated on her previous remarks on disclosure reform, stating: "I believe we should rethink not only the type of information we ask companies to disclose, but also how that information is presented, where and how that information is disclosed, and how we can take advantage of technology to facilitate investors’ access to information and make it more meaningful to them."

Looking forward into 2014, Ms. White noted that she expects the SEC will focus on market integrity, enforcement, compelling more admissions of wrongdoing, and uncovering more instances of financial fraud. These agenda items are in addition to the mandates by the Dodd-Frank and JOBS Acts, which include examining equity market structure, duties of brokers-dealers and investment advisers, the management and responsibilities of clearing agencies and credit rating agencies, Dodd-Frank executive compensation, target date funds, systemic risk issues, and broker-dealer financial responsibility, among others.

The full text of Ms. White's speech is available on the SEC's Web site.

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