Skip to main content
Complete Olympic Games coverage at your fingertips
Your inside track on the Olympic Games
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Complete Olympic Games coverage at your fingertips
Your inside track onthe Olympics Games
$1.99
per week
for 24 weeks
// //

The new chair of the U.S. securities regulator on Thursday told lawmakers the agency is considering new trading rules as it looks to address problems highlighted by this year’s GameStop Corp saga and the meltdown of private fund Archegos Capital.

Gary Gensler, sworn in last month as chair of the Securities and Exchange Commission (SEC), appeared before the House of Representatives Financial Services Committee.

Gensler said in prepared testimony that new trading rules being considered include: greater disclosure of “short-selling,” a strategy that hedge funds and other big investors use to bet a stock will fall; increasing transparency around securities lending, which underpins short-selling; and new reporting rules for the “total return” equity swaps that felled Archegos.

Story continues below advertisement

Democrats are pressing Gensler to take a tough stance on Wall Street after Gamestop’s fierce rally in January, fed by bullish posts on Reddit, and the March implosion of New York-based family office Archegos, exposed gaps in the SEC’s rules.

“It is critical for our cops on the block at the SEC to protect investors and ensure our markets are transparent and fair,” said Representative Maxine Waters, the Democratic chair of the committee.

Gensler also said he has asked SEC staff to draft a request for public input into how trading apps entice retail customers using game-like features such as points, rewards and competitions - a tactic known as “gamification.” He added that he has directed staff to draft a proposal on expediting the two-day trade settlement process to reduce system risks.

The SEC chair, who developed a reputation for being tough on Wall Street when he ran the U.S. derivatives regulator from 2009 to 2014, did not elaborate on the timing for any regulatory proposals, which typically must go through a lengthy rule-making process that includes public feedback.

Shares of GameStop soared in January after retail investors congregating on Reddit and trading on low-cost brokerage platforms bought shares in the video game retailer, causing big losses for hedge funds that had shorted the stock.

That episode was followed in March by the meltdown of Archegos, whose soured media stock bets left the fund and banks that financed its trades nursing roughly $10 billion in losses.

“Whenever there are major market events, it’s a good idea to consider what risks they might have placed on the entire financial system,” Gensler said in his prepared testimony.

Story continues below advertisement

Gensler’s promises to Congress signal potential disruption for Wall Street, which is already feeling the pain from an SEC crackdown on shell-company mergers and worried about the agency’s pledge to stiffen rules on climate change risks.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies