ASA Sends Letter on Financial Services Markup




WASHINGTON – The American Securities Association (ASA) sent a letter to the House Financial Services Committee leadership ahead of today’s markup on several bills to address the “meme stock” market trading frenzy.

“ASA has been fighting for years to promote competition and transparency in our nation’s equity markets and to expand access for retail investors,” said ASA CEO Chris Iacovella.

ASA focused its comments on the following bills:


H.R. 4618, the “Short Sale Transparency and Market Fairness Act”

The ASA supports this bill because it would increase transparency requirements for Wall Street hedge funds who often launch activist campaigns against America’s small public companies. We also believe there is no compelling reason for short positions to continue to be treated any differently than long positions. Implementing short sale disclosure for hedge funds is long overdue and will vastly improve transparency in our public markets.

H.R._ , to require Government Accountability Office (GAO) to carry out a study on the impact of the gamification, psychological nudges, and other design techniques used by online trading platforms, and for other purposes.

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

H.R. 4617, the “Order Flow Improvement Act.”

The ASA supports the amendment in the nature of a substitute expected to be offered to this bill. We previously highlighted our concerns over payment for order flow (PFOF) in a letter to the SEC. The fundamental question that must be answered in the debate over PFOF is: does a retail customer order involving PFOF obtain a better execution than an order without PFOF? And even if the average customer receives price improvement with a PFOF order, the SEC must examine whether that price improvement would have been even higher if PFOF was not involved.

H.R. 4619, to amend the Securities Exchange Act of 1934 to prohibit trading ahead by market makers, and for other purposes.

The ASA has concerns over this bill. The practice described by this legislation is already prohibited and firms are required to have policies and procedures in place to prevent it, so it is unclear why the policy in this legislation is necessary.

H.R. 935, the “Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2021.”

The ASA has long opposed this legislation, which would leave entrepreneurs engaging in a small business merger or acquisition (M&A) transaction completely unprotected. The bill deregulates in a way that will put small and regional broker-dealers who will continue to have to operate under regulation (i.e. advisory compensation constraints, anti-money laundering rules, etc.) at a competitive disadvantage against those who do not.

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



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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 http://americansecurities.org/.