SEC Considering New Trading Rules

“Many of these features encourage investors to trade more,” Gensler said. “We need to ensure investors using apps with these types of features continue to be appropriately protected.”

share

key takeaways

  • Gensler says SEC considering new trading rules in response to January’s GameStop short squeeze and Archegos Capital Management’s collapse
  • Gensler said that he hopes to implement new policies, including increased disclosure requirements on short selling and greater transparency for securities lending, which supports short selling

New Securities and Exchange Commissioner Gary Gensler appeared before lawmakers Thursday to testify for the U.S. House Committee on Financial Services’ third hearing on GameStop. 

Gensler revealed that the SEC will be considering new trading rules in response to January’s GamesStop short squeeze and Archegos Capital Management’s collapse. 

GameStop shares skyrocketed in late January after retail investors coordinated buys using Reddit group WallStreetBets and low-cost trading app Robinhood. Shares rose from $4 to $483 in four months in what was referred to as a “pump and dump” scheme. 

The Archegos meltdown came shortly after in March when the family office offloaded billions in block trades through Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse, among others. 

“Whenever there are major market events, it’s a good idea to consider what risks they might have placed on the entire financial system,” Gensler said in his prepared testimony.

The new commissioner began his testimony by addressing the ‘gamification of trading,’ saying that features like leaderboards, rewards, bonuses and competitions that are designed to promote engagement can be harmful. 

“Many of these features encourage investors to trade more,” Gensler said. “We need to ensure investors using apps with these types of features continue to be appropriately protected.”

Gensler said that he hopes to implement new policies, including increased disclosure requirements on short selling and greater transparency for securities lending, which supports short selling. The SEC will also be seeking public input into how trading apps manipulate trading with “gamification” features, per Gensler’s request. 

“Investors do want to bring some consistency and comparability to climate disclosure,” he told lawmakers.

Gensler has faced pressure from Democrats, who want to see tougher Wall Street regulations. 

“It is critical for our cops on the block at the SEC to protect investors and ensure our markets are transparent and fair,” said Maxine Waters, the committee’s Democratic chair.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

The stock price jump comes after Coinbase reported ending its seven-quarter run of net losses during the fourth quarter

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume