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SEC chairman Mary Schapiro weighs in on the future of her career, the Volcker Rule, market structure, and how to regain consumers’ trust in the fina...
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Praised by some for rescuing the securities exchange commission in the aftermath of the Madoff scandal Mary Schapiro has been criticized by others.
-- enforcing stricter penalties on Wall Street and not addressing market structure.
The chairman of the SEC just wrapping up a talk on financial regulation at this at my business conference here Manhattan.
-- -- the her now chairman thank you for your time we appreciate it.
Thank you it's a pleasure being here.
Well I think you wanna ask you this my -- -- -- -- reporting that you're looking believe next month so what are your plans.
I don't have any plans I you know it it amuses me that.
There's been speculation about my departure being -- for about 2 years so I am I I take this in stride is just be more of the same.
Okay okay what -- reported -- what your next -- may -- but I don't ask -- about current business especially with regards to the -- role.
Other reports that the SEC has been in disagreement about language I would banking regulators I mean do you think that this thing's gonna be written by the end of the year.
I'm you know compete before I answer that which -- -- of course happy to do I really -- -- disagree with the premise you started out with right at the very beginning of how we've had a record year in enforcement we have had higher penalties than ever before and the agency's history.
The enforcement program at the SEC is -- an extraordinary job.
On beyond that of any other financial regulator.
Perhaps ever but certainly over the last year's coming out means prices.
With more than a 110 entities and individuals -- directly and financial crisis cases.
And more than half of those being CE o.s CFOs -- other senior management so.
I think I it's really important for your viewers to know the SEC -- a cop on the -- And that we have been aggressively enforcing the laws and as I said.
At a record level and with respect to market structure.
We've tackled market structure repeatedly over the last several years we continue to do so.
But we have a lot of new rules in place a lot of protections it didn't exist before when I arrived.
On that we'll have that helped to make a market structure more resilient.
And protect investors sorry sorry but I had to get that out because act alone I wanted to put to rest the misunderstandings.
On the Volcker Rule.
You know the agencies have been working very hard.
To try to come up with a uniform Volcker Rule at a -- -- the banking regulators the SEC and CFTC -- proposed the same rule.
That we got about 191000 comment letters very detailed very.
Softball and we've been working through as a group all of those comment letters and trying to come to a final rule that we can all agree upon.
Comic you know there are differences as you'd expect there might be differences when you.
Banks and broker dealers -- swap dealers and others.
That are are such different institutions dealing with.
The markets in different ways -- -- -- think that the agencies are working very well together okay trying to come to closure -- Talk about market structure event in I'm curious if -- had any conversations recently went.
Maybe the heads of the exchanges about these private markets is dark -- I mean do you think that there's still concern out there about.
Another flash crash -- -- that many investors are worried that we're still not quite protected.
Sure why not talk to heads of exchanges the many exchanges -- you know -- that we have from time to time about market structure issues and -- -- call them on the flash crash occurred I summoned to the heads of every exchange to Washington immediately.
To help hammer out some.
Remedial actions that we could take together to try to ensure that we would not have another flash crash that's how we ended up with single stock circuit breakers.
Revised market wide circuit breakers the limit up limit down rules.
Banning naked access to the markets.
-- clearly erroneous trade break rules banning stub quotes.
A large trader reporting system and a consolidated audit -- the SEC so.
We've been pretty aggressive trying to move for -- market structure issues there's more to do in this space and -- and you will see more coming from the agency over the next several months.
Including something we call -- SCI that will require exchanges.
To have adequate capacity -- -- -- availability of their systems and to test.
For those and a very rigorous way.
We brought a case recently against the New York Stock Exchange offer market structure question.
Our problem where they were not making data available equally to retail investors as to proprietary data -- so you'll see more enforcement efforts.
And you'll see -- -- more examinations in broker dealers to ensure that -- -- following the market access rule which was a question in the night debacle.
Right and we all remember that in has been several issues you know you could just doesn't at a roundtable you've got around table as October 2 he talked about the issue of high frequency trading.
But this sort kind of wonder what the rules are actually going to be is -- possible that we could see.
A transaction tax for example to slowed down high frequency trading so there's more accountability in these trades.
While congress is debating a transaction tax I was actually been -- and it is being debated in Europe as well.
There are other opportunities out there are common things -- we can explore and are exploring.
The exchanges after night came back to us with the idea and market participants generally not just exchanges the idea to kill switch.
I'll we've also talked about minimum time in force for orders which is something the Europeans are looking them as well.
Where in order would have to -- live in the market four and a half the second normal course on the some increments.
-- looking a market maker obligations.
We're looking at a wide variety of additional measures.
-- -- to bolster market resiliency that I think it's really important people understand we continuously taken steps over the last four years to improve market destruction.
-- -- has hit this you know one -- -- recent stories that really surprised many on Wall Street was the accident that from handed over at Citi Europe I mean is that something you think the SEC is.
Gotta look out may -- particular how the board handled the release of the information about his accent.
Now I'm -- -- really something I can't comment on.
Okay okay before -- let you -- -- I do wanna go back to those obviously you've had its spending you you -- -- SEC is chairman.
At a very difficult time for all of us have let the market crash obviously and then.
With Bernie Madoff I am curious if you were to leave and I -- you don't wanna comment on your future plans but it would do you think the it would go back.
And maybe look at federal once again maybe go back to the and it and DSCR is there something more that you wanna do when your career the could be next for you that would be exciting to you.
Oh gosh I.
I had as I said I have no plans right now I'm certainly not going back anywhere I came from.
But I -- I you know I show up every day at the SEC.
Doing the best job I possibly can for American investors and that's where my focus is right now.
OK well let me ask you this many investors -- mean we have got confidence right now from the investing public at an -- An all time -- in fact Pimco is gonna be speaking later today that same conference -- -- they found that.
Only 25% investors even trust their brokers 27% trust mutual funds.
Don't change that chairman have to -- tell the American public they can trust the public markets once again.
Well I think it's not surprising coming out of a financial crisis is severe and as deep as the one we've come out of that people.
Will take some time to rebuild their trust it's and it's just incumbent upon the industry and intermediaries.
-- work with investors that they treat them fairly that they put their interests first and in all things that they do it's critical of the exchanges have.
The technology and the resiliency and provide a level playing field as they possibly account for investors.
-- to interact it's critical that public companies give the disclosure.
That investors need to make rational decisions about how to allocate their capital.
Everybody has a role to play here the regulators exchanges the broker dealers the public companies and mutual funds and other intermediaries.
All have a role and it boils down to putting in terms of the investor first.
Our outlook chairman Mary Schapiro of the SEC.
Chairman we appreciate tunnel -- -- -- that love to have you back any time please come back.
I thank you I would.
