Gary Gensler, President Joe Biden’s choice to head the Securities and Exchange Commission, said he would hope to oversee cryptocurrency regulation, the “gamification” of stock trading and board diversity, if confirmed. that he would be Wall Street’s chief regulator.
Gensler, who testified before the Senate Banking Committee on Tuesday, had been grilled about whether he would investigate payment for the flow of orders and game-like tactics used by some online brokers to lure customers to their platforms.
Both topics have garnered attention on Capitol Hill for the past two months following the wild trade of GameStop, AMC Entertainment and other stocks in January.
Senators, including Massachusetts Democrat Elizabeth Warren, asked Gensler during the virtual hearing his views on Robinhood Markets, which operates one of the most popular online trading apps.
Those who criticize Robinhood say the company is trying to entice young or inexperienced clients to trade with features on the trading platform that mimic gaming apps, such as virtual confetti when making a trade.
The SEC candidate pledged to analyze the rise of “gamification” in stock trading and intervene if necessary.
He also identified potential problems with the current order flow payment structure, a common practice on Wall Street where trading firms, such as Citadel Securities, pay companies like Robinhood to send their clients’ orders for execution.
We will “look at the market structure in the stock markets around payment for order flow, when honestly only a few – a handful – of financial companies buy most of the retail flow in America,” Gensler said Tuesday.
The ex-Goldman Sachs partner and former Commodity Futures Trading Commission chief also raised questions about cryptocurrency, blockchain and bitcoin. As a professor at MIT’s Sloan School of Management, Gensler teaches about digital currency and blockchain.
Asked how the SEC should oversee such emerging technologies, he replied that responsibility could fall on the government depending on how assets like bitcoin are classified.
“To the extent that someone is offering an investment contract or security that is under the purview of the SEC, and there are exchanges operating there, we need to make sure there is investor protection,” he said.
“If it isn’t, and it’s a commodity, as bitcoin is supposed to be, then it’s either a question for Congress … or it might be a question for the Commodity Futures Trading Commission.” to.
Other lawmakers, such as Senator Sherrod Brown, D-Ohio committee chair, questioned Biden’s choice to lead the SEC on how he thinks regulators should prioritize climate change.
“Increasingly, investors really want to see tens of trillions of dollars in assets behind it,” Gensler said of climate-friendly investments. “They want to see disclosures about climate risks. I think issuers would benefit from such guidelines.”
Ranking member Sen. Pat Toomey, R-Pa., Asked Gensler’s take on Nasdaq’s drive to increase board diversity.
He and other Republicans have rejected a recent plan submitted by the stock market operator to the SEC that requires the thousands of companies listed on the stock exchange to include women, racial minorities and LGBT individuals on their boards.
Toomey asked Gensler whether he thinks boards should be “forced or pressured to comply with some sort of quota regarding race, gender, or sexual orientation.”
Gensler responded by promoting the benefits of diversity more widely and among the ranks of the SEC.
“I think diversity in boards and diversity in senior leadership … benefits decision-making, and it’s something I’m committed to at the SEC and the leadership there,” he said. “It is a positive step forward in the leadership of the SEC that I will include, if confirmed.”