SEC proposes new regulations to promote fairness among broker-dealers

economictimes.indiatimes.com:

stock exchanges, the Securities and Exchange Commission (SEC) is set to propose a proposal targeted at eliminating pricing practices that have typically benefitted larger broker-dealers.

This plan, which will be voted on during a public hearing in Washington, seeks to limit the practice of stock exchanges giving lower transaction fees and incentives to brokerages with bigger trading volumes, a practice that has historically given larger businesses an unfair competitive advantage.

The SEC's motivation behind this initiative is to address the intricate and unequal pricing tiers that exist among various exchanges, often resulting in substantial cost discrepancies for different brokerages. These current pricing structures, as outlined by SEC officials, have evolved into complex systems that prove challenging for market participants to decipher.

One of the key purposes of this new regulation is to prevent conflicts of interest that arise when brokerages execute orders in a way that prioritizes their own interests above the interests of their clients.

By removing pricing benefits, the SEC seeks to ensure that brokerages prioritize the best interests of their clients while carrying out transactions.

It should be noted that these proposed legislation do not apply to situations in which brokerage companies engage in proprietary trading for their own benefit rather than operating on behalf of clients. In such cases, the ban on transaction price reductions and incentives would not be applicable.

Nevertheless, stock exchanges would be mandated to disclose their pricing tiers and the number of exchange members eligible for these tiers to the SEC, with this information made accessible to the public. This idea seeks to increase