A coalition of Republican members of the Financial Services Committee Capital Markets Subcommittee voiced their opposition to the Securities and Exchange Commission’s (SEC) recent proposal to prohibit volume-based exchange transaction pricing.
Volume-based discounts are integral to various sectors of the economy, the lawmakers said. They promote competition and enhance consumer benefits, while playing a crucial role in fostering liquidity. The lawmakers warn, in a letter to SEC Chair Gary Gensler, that prohibiting these discounts could undermine fundamental market dynamics and display a lack of understanding of market operations by the SEC.
Further, they argue that the proposal is misguided, lacks empirical foundation, and could potentially disrupt the market ecosystem.
The letter was led by Rep. Dan Meuser (R-PA) and Ann Wagner (R-MO), chair of the subcommittee. It was also signed by Reps. Pete Sessions (R-TX), Bill Huizenga (R-MI), Tom Emmer (R-MN), Bryan Steil (R-WI), Andrew Garbarino (R-NY), Michael Lawler (R-NY), Zach Nunn (R-IA), and Erin Houchin (R-IN), urges the SEC to reconsider this proposal.
“Our letter to the SEC sends a clear message: we won’t stand by while unnecessary regulations threaten the health of our markets. Volume-based discounts are more than just numbers; they’re about fair play and smart business. The SEC’s proposal to do away with them shows a worrying disconnect from real-world market practices. We’re in this to protect every investor out there. As Republicans, we believe in rules that make sense, that are based on hard facts, not just theories. Our markets thrive on competition and transparency, and that’s the kind of environment we’re fighting to preserve,” Meuser said.
The letter also expresses concern that the SEC’s initiative relies more on conjecture than concrete evidence, potentially disrupting the market without just cause. Further, they caution that the proposal could lead to a less transparent market with fragmented liquidity, contradicting the SEC’s mandates. In addition, they are concerned that it could lead to decreased competition and result in higher costs for investors.
Finally, they urge the SEC to reconsider this proposal. They also requested a detailed response from the SEC to several pertinent questions, focusing on the empirical basis of the proposal, its potential impact on market liquidity and global competitiveness, and its implications for the existing regulatory framework.