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ASA Backs Bills to Boost Investor Protections and Address Equity Market Structure

Supports modernizing short disclosure, addressing gamification of trading, and scrutinizing payment for order flow.

WASHINGTON – The American Securities Association (ASA) today sent a letter to the House Financial Services Committee outlining its support for several discussion draft bills aimed to boost investor protections and address equity market structure issues, ahead of a hearing further examining the GameStop market frenzy.

“In the wake of the GameStop market frenzy, ASA commends the Committee for considering several bills to boost protections for retail investors while maintaining their access to the equity markets,” said ASA CEO Chris Iacovella. “As these bills make their way through the legislative process, we look forward to working with Congress and Chairman Gensler as a helpful partner.”

“Laws and regulations addressing equity market structure must support small business capital formation and market stability. For far too long, they have not,” Iacovella wrote in the letter. “The big picture discussion in this area must recognize that different tiers of market structure exist; that the current one-size-fits-all regime has contributed to a decrease in IPOs; that the reliance on “time-price” priority exacerbates price moves in all securities; and that current law grants monopoly pricing power to for-profit entities whose interests are not aligned with those of mom-and-pop investors.”

ASA outlined its support for the following discussion draft bills:

H.R.____, to amend the Securities Exchange Act of 1934 to modernize reporting requirements under section 13(f) of such Act.

The ASA strongly supports the required disclosure of short positions by institutional investors because it will increase transparency of Wall Street hedge funds and other large institutions that often target America’s small public companies.

H.R.____, to require the Securities and Exchange Commission to carry out a study on the impact of the gamification of online trading platforms.

The ASA strongly supports this bill, in particular the provisions which direct the SEC to study whether gamification features “may constitute investment advice or recommendations under Federal securities laws and regulations, including Regulation Best Interest.”

H.R.____, to amend the Securities Act of 1934 to establish certain requirements with respect to retail investor options trading.

ASA supports provisions of this draft bill that would prohibit brokers from providing incentives to investors for trading options. However, we caution that the aggregation and disclosure aspects of the bill – which include a requirement that brokers calculate the aggregate options trading losses of all their customers – may prove costly, unworkable, and ultimately unnecessary if an incentive prohibition were in place.

Legislation to address equity market structure issues.

We are pleased the Committee is focusing on the issue of “payment for order flow” by putting forward a discussion bill that would prohibit the practice. We believe that in light of the GME episode, the utility of the payment for order flow practice – and the misaligned incentives it creates – deserves heightened scrutiny. Importantly, the Committee should examine whether clients receive different prices on their purchases/sales depending on the level of payment for order flow.

To read ASA’s full letter to the Committee, click here.


ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at


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