The U.S. equity markets are the most robust in the world and continue to be among the deepest, most competitive, most liquid and most efficient. They are also among the most regulated.

Efficient and resilient market structure is key to sustaining investor confidence and participation in the equity markets. Market structure can drive liquidity and trade costs for businesses and investors alike. Therefore, market participants continually strive to create the most efficient markets. This includes adapting new technologies to achieve operational efficiencies, searching for new ways to transact and, generally, optimizing market structure to maximize efficiencies. Market makers exist to provide liquidity in securities and execute customer trades, playing an important role in equity market structure by enabling liquidity and balancing buy and sell demand. Importantly, investors, particularly retail investors, benefit from this efficiency and resiliency through reduced costs including no or low commissions, best execution and competition. All market participants seek to drive innovation to further improve equity market efficiency, resiliency and most importantly the benefit to investors. However, regulators must carefully weigh the impact of any changes on investors. Specifically, as the SEC considers proposing major changes to our current equity market structure system, it is critical that any changes be data-driven with robust cost-benefit analysis.

In March 2024, the SEC adopted the amendments to Reg NMS Rule 605. SIFMA has long called for the SEC to update Rule 605; when the rule is implemented, order execution disclosure reports will provide better baseline data for the SEC and stakeholders to consider what, if any, structural changes may be necessary. It is crucial that the SEC pauses the equity market structure proposals until the updated Rule 605 is implemented because new proposals must be thoughtfully considered and only use data that accurately reflects the current market dynamics.

In the end, regulators and market participants should work towards the same goal: to promote market resiliency and efficiency and ensure the U.S. equity markets continue to benefit investors and play an essential role in capital formation.

Important Links

SIFMA has long called for a review of equity market structure, having previously presented recommendations designed to enhance the current structure to the SEC and Congress in 2013, 2014 and 2017. We continue to be engaged on these issues and call attention to the following important resources:

SIFMA Comments

• SIFMA Comments on the SEC’s Equity Market Structure Proposals
• The SIFMA Podcast: Creating Risk by Fixing What’s Not Broken
• Penn + Wall Blog Post: 1,600+ Pages of “Solutions” in Search of a Problem

SIFMA Insights

• The ABCs of Equity Market Structure
• Market Metrics & Trends

SIFMA Research

• US Equity & Related Statistics
• Research Quarterly: Equities

Conferences & Webinars

• Market Structure Conference (November 6-7, 2024) 
• Equity Market Structure Roundtable (April 19, 2023)
• The SIFMA Podcast: Top Five Takeaways from SIFMA’s 2023 Market Structure Conference

 Watch the Equity Market Structure Roundtable On Demand

Download the transcript.