Clayton: SEC Looking at Fixed-Income Market with “Great Focus”

Last Tuesday, November 28th, U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton said that the SEC had formed a group to examine fixed-income markets with the goal of protecting retail investors, according to a recent Reuters article. As reported in a previous SFIG newsletter,  the SEC recently took the first step in formally establishing an advisory committee to scrutinize the rules of the fixed income market and advise on potential reforms. The Fixed Income Market Structure Advisory Committee will have a two-year mandate and likely meet four times a year, with the potential for subcommittees to meet more often.

During his remarks, Clayton said the SEC was looking at fixed-income markets with "greater focus" than in the past as such markets would look more like equity markets in the coming years, according to Reuters.

"Developments you've seen in equity markets in recent years, they are going to come to the fixed income markets," he said, following a big push by retail investors into fixed-income products that have become less complex and easier to use.

Clayton also said that the SEC was waiting to see how the revised Markets in Financial Instruments Directive (MiFID II) played out in Europe before implementing tough rules in the US. Part of the sprawling MiFID overhaul, Reuters explains, will force investors in the European Union to pay for research directly, and global asset managers are expected to "unbundle" payments in other regions. Clayton said the SEC would listen to feedback from big long-term investors on MiFID II.

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