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ASA Outlines Market Structure Reforms

Submits comment letter to SEC Investor Advisory Committee

WASHINGTON – The American Securities Association (ASA) submitted a comment letter to the U.S. Securities and Exchange Commission ahead of today’s meeting of the Investor Advisory Committee. In the letter, ASA called on the SEC to reform equity market structure in a way that better supports small business capital formation and market stability, and continued to raise concerns regarding payment for order flow (PFOF).

“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 CEO Chris Iacovella wrote in the letter.

“The SEC can end today’s one-size-fits-all market structure by changing the rules to recognize that: (1) different tiers of market structure exist within the current ecosystem; (2) the order handling, time-price priority, and best execution obligations must be changed to make sense for each tier of market structure; (3) payment for order flow driving market behavior must be changed; (4) government-licensed monopoly control over all manner of pricing must end; and (5) the profit motive of Wall Street’s high frequency traders must take a back seat to Main Street’s desire for market stability,” Iacovella wrote.

On payment for order flow, “The SEC needs to dig a little deeper because while an order may receive price improvement, we think that the price improvement could have been better if the order was not part of a firm’s PFOF decision. The Chairman seems to agree. As the IAC and policymakers examine this issue, we believe that both wholesale PFOF and exchange PFOF must be taken into consideration. You cannot change or end one type of PFOF without also ending the other, especially when many believe that the heart of the problem lies with exchange PFOF.”

“We ask that whatever market structure changes the SEC undertakes, the outcome of such changes do not serve to benefit for-profit monopolies who have a long history of abusing their statutorily created position in our market structure to price gauge market participants.”


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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