The current chairman of the Securities and Exchange Commission has made it his mission to erase the work of his predecessor from the historical and regulatory record. But Jay Clayton’s name will live on in the most appropriate way imaginable: the survival of his bit of petty vengeance against the stock exchanges which gave him such trouble during his SEC tenure.
The judges…. refused to vacate a separate provision limiting the voting power of large exchange groups that own multiple marketplaces.
The judges also left in place another provision that had been contested by the exchanges, under which the firms that administer the SIPs must be independent of exchange groups that sell stock-market data products. Currently, the country’s two SIPs are administered by NYSE and Nasdaq, and the provision would dislodge them from that role.
Those kinds of restrictions are exactly the sort of thing that seem likely to remain after current SEC chief Gary Gensler’s complete restructuring of stock market operations (although whether they’ll withstand the Supreme Court’s opinion that federal agencies can’t do anything is less sure). Unfortunately, and not for the first time, Clayton’s carelessness about what the laws he was charged with implementing and enforcing actually say mean the new rules are slightly less onerous (and less costly) than he had hoped.
Judge Karen LeCraft Henderson vacated the provision of the SEC order giving seats on the SIP committees to representatives of non-exchange firms. She agreed with NYSE, Nasdaq and Cboe’s argument that federal law only allowed the data feeds to be run by the exchanges and the Financial Industry Regulatory Authority, which also has a seat on the committees. The provision is “unreasonable and therefore invalid,” Judge Henderson wrote.
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