SEC Chairman Mary Jo White said today no new issues have been raised for the commission by a controversial new book about high-frequency trading.
In opening a meeting of the SEC’s investor advisory committee, White said she disagreed with assertion in the book Flash Boys by Michael Lewis that the stock markets are “rigged” against retail investors and in favor of high-speed traders.
White said that while some high frequency traders have taken improper actions that harm investors, the group as a whole has provided retail market investors with liquidity and price advantages.
While White said the SEC has been looking at policy and enforcement issues surrounding high-frequency trading for years, Commissioner Daniel Gallagher said the issue may be coming to a head for the regulator.
“We haven’t shown the public and markets how much we know on high frequency trading and that is going to change,” he said.
Speaking to the possibility of the SEC allowing a pilot for greater bid/ask spreads called “tick sizes,” which proponents claim would aid capital formation and better inform investors by increasing analyst coverage of small stocks, Commissioner Michael Piwowar said the project should be monitored in real time to see if there is harm for retail investors from the increased costs.
On another issue, SEC Commissioner Kara Stein said investors voting by proxy should have the same choices for directors that shareholders attending annual meetings in person possess.
The committee also saw the head of the SEC’s new Office of Investor Advocate, Rick Fleming, make his first public remarks.
One of the office’s tasks, Fleming said, will be to conduct investor surveys and testing to present their case before the commission and Congress.
Fleming said he is hiring an ombudsman mandated by the Dodd-Frank Act that investors will be able go to if they have issues with the SEC and feel it is not being tough enough on “bad guys.” He is also looking for an economist to inform the commission on the costs and benefits of potential rules.