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From Securities Regulation Daily, September 16, 2016

Piwowar urges public to help spur SEC to conduct review of Regulation NMS

By John Filar Atwood

The SEC is providing an opportunity for the public to influence whether the Commission conducts a comprehensive review of Regulation NMS, and SEC Commissioner Michael Piwowar is urging industry participants not to miss it. He issued a statement to make the public aware that the Commission’s latest rule list—the annual list of rules scheduled for review in the next year—includes Regulation NMS.

Rule list. The SEC publishes its rule list annually as mandated by the Regulatory Flexibility Act. The law requires the Commission to perform a periodic review of rules that have or will have a significant economic impact upon a substantial number of small entities within 10 years of the publication of the rules. The goal of the review is to determine whether the rules should be continued without change, or should be amended or rescinded.

In his statement, Piwowar noted that the Commission historically has not limited the rule list to rules that affect small entities. This year’s review will focus on rules adopted in 2005, including Regulation NMS, he said.

Need for comments. Public feedback is critical to the success of the rule list review, according to Piwowar, but historically the lists have generated little or no comment. In recent years, he noted, the rule list has received only one comment on average.

Piwowar has been urging the Commission to conduct a comprehensive equity market structure review program, and he sees this year’s rule list as a chance for the public to spur the agency to finally conduct the needed Regulation NMS review. He noted that when Regulation NMS was adopted, there was uniform support for enhancing market efficiency, but the method the SEC chose to achieve that goal was complex and controversial. There have been substantial changes in technology and economic conditions that warrant the review, he added.

Areas for consideration. Piwowar urged commenters to address certain specific aspects of Regulation NMS, including whether it is still needed, its complexity, and the extent to which it overlaps, duplicates, or conflicts with other federal or state regulations. Commenters also should consider the length of time since Regulation NMS has been evaluated and the degree to which technology, economic conditions, or other factors have changed the practices that the regulation addresses, he said.

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