Here Comes The Short Selling Ban, More Money Market Restrictions
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U.S. Securities and Exchange Commission Chairman Mary Schapiro on Friday said final rules reining in short selling are expected
"in the coming weeks" and the agency will begin examining marketing of retirement products that offer a "sell it and forget about it" mentality.
On short selling, Schapiro told reporters, "Hopefully, you'll see something in the first quarter."
Schapiro also said SEC staff will begin setting up a new system to consolidate market data across a range of exchanges and other trading platforms, which will give the regulator a powerful tool in detecting illegal activity.
"The past year has witnessed one of the most significant rule-making agendas in years--an agenda that shows we are willing to address challenging issues and make the tough choices. The year ahead will be no different," Schapiro said in a speech before the Practising Law Institute.
Regarding short selling, the commission is close to finalizing a rule to rein in short selling. The SEC has asked for comments on whether it should reinstate a short selling restriction known as the "uptick" rule, in which investors can only short a stock after it rose or ticked higher.
Regulators and industry insiders agree that the previous uptick rule isn't workable with current lightening speed trades. But the SEC is expected to approve a modified rule designed to put a stop to short selling as stocks are falling. That rule is expected to be the next major action taken by the SEC.
The other major rule on track to be finalized by the SEC would give shareholders greater access to the proxy voting process. The SEC is mulling whether to give shareholders an automatic inroad to the proxy system under certain conditions or simply allow them to vote for such a plan.
"I'm hopeful over the next several months that we'll be able to conclude on proxy access," Schapiro said after her speech. The SEC has received hundreds of comment letters on the idea with very diverse viewpoints, she said.
On retirement products, Schapiro said she wants SEC staff to look into different kinds of "target date funds" that contain a target retirement date in their names.
"In the year ahead, we are going to confront the issue of the potential for target date fund names to confuse investors, or lull them into a false sense of security. I have asked the staff to prepare a rule proposal to provide additional information to investors when a fund includes a date in its name," Schapiro said.
Schapiro also said she wants to implement fundamental changes in the money market industry, moving it away from the current $1-per-share standard to a floating number that she believes would more accurately reflect funds' fluctuations, an idea unpopular with most funds.
The SEC approved rules last month to require funds to disclose fluctuations around the $1-per-share standard on a monthly basis after a 60-day lag.
Schapiro also said SEC staff this spring will make recommendations on creating a consolidated audit trail for orders and executions across all markets.
"Currently, the self-regulatory organizations have their own separate audit trail systems to track information relating to orders in their respective markets. But, it is difficult to connect the dots and ferret out wrongdoing as trading activity frequently occurs across various markets," Schapiro said.
Schapiro last year created a task force to study how such a system would work. The acting head of the trading and markets division said last year the system would require "substantial coordination" among various exchanges and other trading bodies.
But the consolidated system also would be invaluable for exchanges and the commission to detect illegal activity across multiple markets.
The new surveillance system will be part of a state-of-the-art data collection, surveillance and analytics room envisioned by the Enforcement Division.