NEW YORK (Reuters) – The recent frenzy of trading around GameStop Corp and other so-called “meme” stocks highlights the shortcomings and challenges in US markets as retail investors become more present, stock market leaders said on Tuesday.
“The regulatory structure of US capital markets, in my mind, is flawed,” Jeff Sprecher, chief executive of Intercontinental Exchange Inc., owner of the New York Stock Exchange, said in a panel at the FIA Boca a Future virtual conference. Industry Association.
Regulators have focused on competition between market intermediaries, such as brokers and stock exchanges, rather than between buyers and sellers who want to get the best prices, and the GameStop event exposed problems with this structure, he said. .
In January, retail investors coordinated through social forums in an attempt to punish hedge funds by buying GameStop shares and other very short-circuited names, raising their prices and forcing short sellers to close high-loss positions.
At the height of the trading craze, several retail brokers restricted the purchase of GameStop after the collateral requirements to eliminate transactions increased, upsetting many traders.
The saga sparked congressional hearings, regulatory polls and put control of missing sales under control.
“I hope that in the future the regulators will withdraw some punitive rules and allow the market to deal with the intermediate structure,” Sprecher said.
The challenge now is to determine what constitutes unacceptable business behavior because retailers coordinate online, said Loh Boon Chye, CEO of the Singapore Exchange.
Market manipulation when it comes to the online activity of retail investors has not been defined, which is “worrying,” said CME Group CEO Terry Duffy.
He pointed to the legalization of gambling and marijuana in most US states as examples of regulations that take a simpler approach.
“People want to be responsible for their own destiny,” he said.
Reporting by John McCrank; Edited by Richard Chang