The New York Stock Exchange (NYSE), Charles Schwab Corp, and Citadel Securities have jointly urged the U.S. Securities and Exchange Commission (SEC) to withdraw two new rules aimed at overhauling stock trading practices.
This collective action represents a strong industry resistance against the SEC’s most significant attempt to reform stock market rules in nearly two decades.
In a comment letter to the SEC, the companies expressed “deep concern” over the far-reaching proposals, stating that they could dramatically alter the market structure without a thorough assessment of their combined impact or potential unintended consequences.
The SEC’s proposed rules, announced in December, would require almost all retail stock orders to be routed to auctions and impose a new standard for brokers to demonstrate they secure the best possible execution for their clients.
Additional proposals include lowering trading increments and access fees on exchanges and enhancing disclosures on retail order execution.
SEC Chair Gary Gensler has stated that these changes aim to improve market quality and efficiency by increasing competition for retail stock orders and reducing unnecessary intermediation.
The NYSE, Schwab, and Citadel Securities have asked the SEC to withdraw the auction and best execution proposals indefinitely, arguing that they could decrease market liquidity and cause confusing regulatory overlap.
They suggest that a more focused approach would provide significant benefits to U.S. equity market participants and lower the risk of negative outcomes, such as firms withdrawing from their role as liquidity providers, which would especially harm retail investors.
The SEC will review all comments submitted during the open comment period and generally responds to these as part of the final rule-making process, not before, according to a spokesperson for the agency.
