Wall Street reforms
The new head of the US Securities and Exchange Commission (SEC), Gary Gensler, has unveiled 49 solutions to reform Wall Street rules, including a call for stricter regulation of platforms such as Robinhood and requirements for public companies to disclose information related to climate risks.
Gary Gensler, the new chairman of the US Securities and Exchange Commission (SEC), unveiled an "Agency Rule List" on Friday, which includes 49 new rules, some of which are still under preliminary review by the commission. The reforms will require the votes of a majority of SEC members and the support of the Senate to take effect.
Among the proposed solutions:
- A new requirement for corporate reporting, which would have to include information on climate change risks;
- A requirement to include people of different nationalities on company boards;
- Restrictions on "gamification" of trading, implying stricter requirements for online brokers such as Robinhood;
- Requiring disclosure of short selling by bidders in order to counter stock manipulation and illegal trading contrary to SEC rules.
As for the first two proposals some lawmakers believe they fall outside the SEC's purview.
Republican Senator Patrick Toomey, who serves on the Senate Banking Committee, which oversees the SEC, said earlier, "Securities laws are not the right tool to regulate the climate or correct racial injustices".
To counter illegal short selling, new SEC rules could require more detailed disclosure of short sales, such as the name of the issuer, name, class and aggregate amount of each security's short sales.
SEC to tighten requirements for online brokers with zero commissions
Online brokers such as Robinhood, Interactive Brokers, E-Trade and others have attracted many retail investors to the market in recent years, providing them with commission-free trading, in turn making money from the data stream.
The SEC believes that these features of online trading platforms encourage investors to trade more, which contributes to a gambling mentality.