Regular investors are cut out of a major financial market and the SEC chief wants to change that

CNBC | Bob Pisani | Sep 10, 2019

SEC jay clayton - Regular investors are cut out of a major financial market and the SEC chief wants to change thatKey Points

  • The head of the SEC says more needs to be done to make it easier for companies to go public.
  • Jay Clayton says his office is taking a “fresh look” at allowing Main Street investors access to the private capital markets.

The head of the SEC says more needs to be done to make it easier for companies to go public and that his office is taking a “fresh look” at allowing Main Street investors access to the private capital markets.

In a speech to the Economic Club of New York on Monday, SEC Chairman Jay Clayton said the lack of more IPOs and the inability of most of the Main Street investing public to access private markets was a “growing concern.”

Clayton addressed what he called the “two segments” in capital markets: the public markets, and private ones, including private equity and venture capital investments.

See:  The Solution To The Fintech IPO Shortage

“Twenty-five years ago, the public markets dominated the private markets in virtually every measure,” he said. “Today, in many measures, the private markets outpace the public markets, including in aggregate size.”

Clayton wants to make the public capital markets (IPOs) more attractive for companies, and expand opportunities for Main Street investors to participate in the private markets. The SEC, Clayton says, is making efforts to modernize financial disclosure rules and to recognize that one size does not fit all, permitting what he calls “scaled disclosures.”

He expressed concern that the Main Street investor for the most part does not have access to private markets, noting that the cost of including individual investors in private offerings is “high.”

Clayton said he wants to take a “fresh look” at initiatives to expand access to the private markets while at the same time providing “appropriate investor protections.”

Clayton addressed several other issues in his speech, in the follow-up Q & A, and in a separate interview on CNBC:

See: 

Bitcoin ETF

Clayton said that “progress has been made” on one of the SEC’s core concerns: how custody is handled. On another core concern — that most pricing of bitcoin occurs on foreign exchanges that are subject to manipulation, Clayton noted that those exchanges “do not provide the same level of protection as our U.S. equity market,” implying that manipulation of prices was still a major concern.

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