Weekly Roundup

NYSE Mayhem: NYSE had a glitch that impacted over 250 stocks and caused dramatic price swings. Two-thirds of NYSE-listed securities, including large companies like Wells Fargo and Nike, started trading on Tuesday without having held an auction to determine their opening price, leading to sudden swings. In addition, 81 stocks mistakenly had short-selling restrictions applied. The exchange blamed the glitch on a manual error, which caused a nearly four-hour trading halt.

Proposed Rule: The SEC proposed a new rule prohibiting conflicts of interest in certain securitization transactions. The Commission is only allowing a 30-day comment period, and market participants, such as SIFMA, are pushing for additional time to meaningfully comment.

Genesis Crash: Crypto exchange Genesis filed for bankruptcy last week. The filing marked the fourth major crypto lender to declare bankruptcy since last spring, and the latest to do so following the collapse of FTX. Other major lenders that have folded include Celsius Network and Voyager Digital.

Crypto Investors: According to a survey by eToro, crypto is now the second most widely owned asset class for young women aged 18-34 – second only to cash. Global crypto ownership by young women increased from 29% in the third quarter of 2022 to 34% in the last quarter.

Grayscale Lawsuit: The DC Court of Appeals expedited oral arguments in Grayscale’s lawsuit against the SEC. Both sides will present their case on March 7. Grayscale initiated the lawsuit last June following the SEC’s decision to reject the company’s application to turn its bitcoin trust into a spot bitcoin ETF.

Fee Rates: Starting February 27, the fee rates for most securities transactions will be set at $8.00 per million dollars. The new rates were determined in accordance with Section 31 of the Securities Exchange Act of 1934.

Crypto Scrutiny: Crypto companies that attempted to go public over the past year claim that they faced increased scrutiny from the SEC, and believe that the pace of the SEC’s review process has been hurting their efforts to IPO. SEC Chair Gary Gensler disagrees, stating that much of the crypto industry is noncompliant.

Treasury Algos: Client execution algorithms have become a common feature of the equities, futures, and foreign exchange markets, yet large Treasury traders have shown little interest in building the algorithms out. In contrast, smaller dealers believe the market is ready for algo disruption.

In the Mix: This Week’s Top FinTech Thought Leader

  • Hester M. Peirce, SEC Commissioner, called for SEC rules around cryptocurrency regulation. She said the SEC should regulate digital assets through rulemaking, asserting it would provide more regulatory clarity for the cryptocurrency industry. “If we continued with our regulation-by-enforcement approach at our current pace, we would approach 400 years before we got through the tokens that are allegedly securities,” Peirce said at the Digital Assets at Duke conference.

  • John Reed Stark, lawyer and former SEC official, defended the SEC’s enforcement efforts in the crypto space. Stark criticized crypto lobbyists for labeling the SEC’s enforcement actions as “regulation by enforcement” – calling the term a “Bogus Big Crypto Catch Phrase.” He believes security regulation works through litigation and SEC enforcement.

  • Elizabeth Warren, U.S. Senator, praised Gary Gensler’s crypto regulation efforts. She stated that the SEC is still ramping up regulation and encouraged lawmakers to give Gensler the necessary resources and authority in all corners of the crypto market.

  • Ed Tilly, CEO of Cboe Global Markets, spoke to Bloomberg TV about the evolution of trading, next gen investors, and his big picture outlook. Tilly encouraged retail investors to take in multiple sources of information, noting the dramatic increase of publicly available information since he started trading in the 80s.

  • Mark Govoni, CEO of Liquidnet, explained in Markets Media how a tumultuous 2022, evolving regulation, and new technology have changed the operation of trading desks. Govoni stated that executing complex and lucrative high-touch trades remain challenging and the role of brokers is more important than ever. “Brokers are carving out a nuanced and highly valuable role that’s more consultative and increasingly central to traders looking to deliver effective and differentiated trading strategies,” he wrote.