(FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.)
Is the US Securities and Exchange Commission seeking more smiles from the securities industry?
It sure seems that way.
It’s no secret that if the Gary Gensler-led SEC of April 2021 through January 2025 had a HappyorNot Smiley Terminal installed on SEC.gov, the aggregate response would have been a far-left, red-face, full-on non-smile.
Gensler left the building more than a year ago, but there was still some residual grousing about his regime just last week at the Equities Leaders Summit in Miami. Specifically, it was reiterated that the old SEC had a my-way-or-the-highway approach, and any “dialogue” the regulator claimed to seek turned out to be decidedly one-sided.
Rock bottom for the SEC’s industry relations may have been December 2022, when Gensler unveiled a quartet of equity market structure proposals, including one that would have had certain retail trade orders go through an auction mechanism to ensure best execution.
Many market participants and operators were aghast at the auction proposal, saying not only that it was a bad idea that would do more harm than good, but that Gensler had just dropped it from out of the blue with little or no consultation with the industry.
So that was how the industry perceived the ‘old’ SEC – overreaching on misguided (if well-intentioned) regulation, and having a tin ear.
The new SEC, under Chair Paul Atkins, is seen as an entirely different animal. In June 2025 the Commission scrapped a bevy of undone Gensler-era proposals, including the much-reviled auction proposal, as part of its less intrusive approach to markets. Enforcement actions were way down last year, as the SEC narrowed its scope to “cases of genuine harm and bad acts” – welcome news for many industry participants who had complained about the regulator’s unnecessarily heavy-handedness.
Beyond the rules themselves, the SEC has said it will work more closely with the industry in setting regulation.
The friendliness of the market regulator came across just this week in remarks from Brian Daly, Director of the Division of Investment Management at the SEC. Speaking to the Investment Company Institute about the SEC’s approach to AI and its implications for the buy side, Daly mused “Well, we could issue a bunch of rules and guidance on what your fiduciary duties require you to do…Or…we could listen to you.”
As it’s still early innings in the current SEC regime, it remains to be seen whether the regulator’s honeymoon with the industry will last – it’s plausible that when it’s all said and done, the SEC won’t prove as friendly as it’s making itself out to be currently. But given Atkins’ deep reputation for market-friendliness, smart money is on the era of good relations continuing.
