Republicans Challenge SEC's Proposal to Prohibit Volume-Based Exchange Transaction Pricing

WASHINGTON, D.C. — A coalition of Republican members of the Financial Services Committee Capital Markets Subcommittee, wrote a letter led by Congressman Dan Meuser (PA-09) and Subcommittee Chairman Ann Wagner (MO-02), expressing significant opposition to the Securities and Exchange Commission’s (SEC) recent proposal to prohibit volume-based exchange transaction pricing. In a letter addressed to SEC Chair Gary Gensler, they argue that the proposal is misguided, lacking empirical foundation, and could potentially disrupt the market ecosystem.

Volume-based discounts, they argue, are integral to various sectors of the economy, promoting competition and enhancing consumer benefits. In the securities markets, these discounts play a crucial role in fostering liquidity. The letter warns that prohibiting these discounts could undermine fundamental market dynamics and display a lack of understanding of market operations at the Commission.

The letter goes on, expressing concern that the SEC's initiative relies more on conjecture than concrete evidence, potentially disrupting the market without just cause. Furthermore, they caution that the proposal could lead to a less transparent market with fragmented liquidity, contradicting the SEC’s mandates. It also raises concerns about decreased competition, potentially resulting in higher costs for investors, which the SEC claims to help with this misguided proposal.

The letter, co-signed by Capital Markets Subcommittee members including Reps. Pete Sessions (TX-17), Bill Huizenga (MI-04), Tom Emmer (MN-06), Bryan Steil (WI-01), Andrew Garbarino (NY-02), Michael Lawler (NY-17), Zach Nunn (IA-03), and Erin Houchin (IN-09), urges the SEC to reconsider this proposal. The members request a detailed response from the SEC to several pertinent questions, focusing on the empirical basis of the proposal, its potential impact on market liquidity and global competitiveness, and its implications for the existing regulatory framework.

The Republican members conclude by urging the SEC to cultivate a regulatory environment that is coherent, transparent, and responsive to the actual dynamics of the market ecosystem, rather than imposing unnecessary restrictions.

Rep. Dan Meuser said, “Our letter to the SEC sends a clear message: we won't stand by while unnecessary regulations threaten the health of our markets. Volume-based discounts are more than just numbers; they're about fair play and smart business. The SEC's proposal to do away with them shows a worrying disconnect from real-world market practices. We're in this to protect every investor out there. As Republicans, we believe in rules that make sense, that are based on hard facts, not just theories. Our markets thrive on competition and transparency, and that's the kind of environment we're fighting to preserve."

The letter can be found here.

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