U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler will lean on corporate disclosures as the Biden administration sets its eyes on curbing anti-competitive behavior.
In a meeting of the newly-formed White House Competition Council set to take place later this week, Gensler will also emphasize the agency’s examination of the impact of revenue models like payment for order flows, a senior SEC official told Yahoo Finance.
The SEC is one of six independent agencies scheduled to meet with eight cabinet secretaries in the council’s first-ever meeting on Friday at 10 a.m. ET, according to sources familiar with the matter. The White House announced the formation of the council in July, aspiring to “address overconcentration, monopolization, and unfair competition.”
Gensler plans on telling the council that the SEC’s role in promoting competition will involve potential rulemaking on corporate disclosures and low-cost investor access to equity capital markets.
Since joining the SEC as chair in April, Gensler has advocated for increased transparency — specifically on climate risks and human capital. He has called for mandatory and standardized disclosures amid the rising popularity of environmental, social, and governance (ESG) funds.
“Investors are looking for consistent, comparable, and decision-useful disclosures so they can put their money in companies that fit their needs,” Gensler said in July.
Mandate of the SEC
On climate-specific risks, the agency has solicited public comment and gathered staff input. Proposed rules could come in the fall, the SEC official said. Gensler has also urged greater disclosure on “human capital,” which would require companies to detail its workforce turnover, workplace safety, and diversity, among other factors.
In Friday’s meeting, the SEC chair also plans on highlighting the agency's work on equity market structure. In the aftermath of the GameStop mania earlier this year, the SEC said it was looking at the concentration of retail order flow and the revenue models that $0 fee brokerages and market makers rely on. The SEC has not ruled out the possibility of a full ban on the model, known as payment for order flow.
Ensuring competition in the spirit of the new council is not directly within the mandate of the SEC; the Federal Trade Commission (FTC) serves as the main agency tasked with handling antitrust law. But the SEC official said leveling the playing fields in corporate disclosures, in addition to fostering capital markets competition that lower the cost of investing, are related to the SEC’s mission of “protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”
The competition council does not directly instruct the agencies to create any specific rules. But those inside the DC beltway have interpreted the council’s formation as important posturing from the Biden administration on consolidation, particularly in the tech and banking industries.
“While the Competition Order does include several specific initiatives that various agencies may adopt, much of the Competition Order is quite broad and, rather than enacting specific changes, directs or encourages federal agencies to consider potential rulemaking,” noted Davis Polk in a July 12 note.
The law firm added that it could take years for any rules to go through the rigorous rulemaking process before finally taking effect.
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.
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