For the U.S. stock market’s biggest players, the writing on the wall is getting easier to read.
Executives from exchange operators and fund companies are starting to join lawmakers and regulators in warning that the world’s largest equities market is beset with conflicts that can harm investors and undermine confidence.
Support for a solution increased yesterday at a hearing led by Senator Carl Levin as representatives from New York Stock Exchange ownerIntercontinental Exchange Inc. (ICE), IEX Group Inc. and Vanguard Group Inc. said trading rebates and payments to brokers for investor trades warrant greater government scrutiny. The systems, embedded in market plumbing over the last two decades, were cited as one of the reasons high-frequency firms now account for about half of volume.
Brad Katsuyama, president and chief executive of IEX, and Robert Battalio, professor at the University of Notre Dame, told the committee that the government should consider forcing greater transparency of market data and incentives.