Testimony of Chair Gary Gensler
Before the United States Senate
Committee on Banking, Housing, and Urban Affairs
Sept. 12, 2023
Good morning, Chairman Brown, Ranking Member Scott, and members of the Committee.
Thank you for inviting me to testify today. As is customary, I’d like to note that my views are myown as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of myfellow Commissioners or the SEC staff.
Protecting the Public for 90 Years
For 90 years, the federal securities laws and the SEC’s work to oversee them have playeda crucial role for the public both in good times and in times of stress. The core principles of U.S.
securities markets regulation have contributed to America’s economic success and geopoliticalstanding around the globe.
At this remarkable agency, we serve investors building for a better future and issuersraising money to fund innovation, while overseeing the $100 trillion capital markets where theymeet. The essence of this is captured in our three-part mission to protect investors, maintain fair,orderly, and efficient markets, and facilitate capital formation.
The SEC is the cop on the beat watching out for your constituents. In the last year, we’ve
filed approximately 750 enforcement actions and conducted approximately 3,000 examinations ofregistrants. We engage with more than 40,000 registrants—asset managers, brokers, dealers,
exchanges, fund complexes, public companies, and many more.
The dedicated staff of this agency does extraordinary work with limited resources. In theface of significant growth in registrants, more involvement in our markets from individual
investors, and increased complexity, the SEC’s headcount actually shrank from 2016 through lastyear. The SEC this year is expected to be approximately three percent larger than it was in FY
2016.
I am proud of this agency. This year we were named the third-best place to work among
midsized federal agencies, building on our ranking in the top five for the previous five years. 1
Updating Our Rules to Meet the Challenges of Our TimeWe are blessed with the largest, most sophisticated, and most innovative capital markets
in the world. But we cannot take this for granted. Even a gold medalist must keep training. As aseminal SEC report in 1963 said, “no regulation can be static in a dynamic society.” The report

1

See Partnership for Public Service, “Best Places to Work in the Federal Government: Securities and Exchange
Commission” (March 29, 2023), available at https://bestplacestowork.org/rankings/detail/?c=SE00.

1continued, “unanticipated changes in the markets and the broader public participation should beaccompanied by corresponding investor protection.” 2
Six decades after the publication of that Special Study, that core idea still rings so true.
That’s why we’re updating our rules for the technology and business models of the 2020s. That’s
why we’re updating our rules to promote the efficiency, integrity, and resiliency of the markets.
We do so with an eye toward investors and issuers alike, to ensure the markets work for them andnot the other way around.
Focusing on the efficiency, integrity, and resiliency of markets helps lower costs. It
enhances access and promotes financial stability. It encourages competition while at the same time
lowering the fragility of the system. Two years ago, we laid out a unified regulatory agenda to dojust that. 3 Included in that agenda were 10 items related to Congressional mandates, most from the
Dodd-Frank Wall Street Reform and Consumer Protection Act and one from the Holding Foreign
Companies Accountable Act. There were also items exercising new authorities granted under
Dodd-Frank.
Each of the subsequent proposals we’ve made further our three-part mission and are based
upon authorities granted by Congress. Our Division of Economic and Risk Analysis provides
robust economic analyses, which consider costs and benefits as well as effects on efficiency,
competition, and capital formation.
We greatly benefit from public input regarding the economics, the policies themselves, andthe SEC’s legal authorities. In the last two years, we have provided the public ample time tocomment, with an average of 70 days to comment from the time a proposal is published on our
website. Since January 2022, we have provided a minimum of 60 days with some as long as 100plus days from the day we a proposal is posted on our website.
In the last two years, we also reopened 18 of our rules for further public comment. When comment
periods close, we often continue to get additional comments, through meetings and otherwise,
which staff has considered as well.
Based on the public feedback, the staff and the Commission consider possible adjustments
to the proposals and whether it’s appropriate to move forward to a final adoption. This process
generally takes 12-24 months, and we move to adopt rules only when the staff and the Commission
think they are ready to be considered. We’re focused on getting things right—based upon theeconomics, the Commission’s legal authorities, and promoting the SEC’s mission—not the clock.
The SEC now has issued proposals for most of that unified agenda we laid out two years
ago. We also have finalized 22 rulemakings, nearly all of which have changed based on public

See “Report of Special Study of Securities Markets of the Securities and Exchange Commission” (1963), p. IV,available at https://www.sechistorical.org/collection/papers/1960/1963_SSMkt_Chapter_01_1.pdf.
3
See Office of Management and Budget, “Agency Rule List – Spring 2021” available athttps://www.reginfo.gov/public/do/eAgendaHistory.
2

2

feedback. A recent news article notes that this number of finalized rules is less than a number ofmy predecessors in a comparable timeframe. 4
In ensuring that markets best serve investors and issuers alike, the middle part of our
mission speaks to promoting fair, orderly, and efficient markets. I’ll speak to our work to enhancethe efficiency, integrity, and resiliency of the markets.
Efficiency and Competition
Congress both in the 1970s and again in the 1990s updated the securities laws, giving the
SEC a specific role to promote competition and efficiency. In particular in 1996, Congress
mandated that, in addition to investor protection and public interest, the SEC consider efficiency
and competition, as well as capital formation, in formulating our rules. 5 Congress understood thatlowering the cost in the middle of our capital markets would help lower costs for issuers and raise
returns for investors.
In that context, we have put out to public comment proposals regarding securities lending,6
short sale disclosures, 7 and large position reporting for securities-based swaps. 8
I will take a moment to elaborate on our work in equity markets and private funds.
Equity Markets
With some 68 million American households investing in the equity markets, 9 thesemarkets are critical to issuers and investors alike. These markets also are experiencing rapidlychanging technology. Thus, it’s appropriate that the SEC freshen up its rules to promote efficiency
and competition in the more than $40 trillion equity markets.
Key aspects of our rules for the national market system haven’t been updated since 2005.
Yet so much has changed. Not only have we seen the electrification of markets, but also a
See Andrew Ramonas, Bloomberg Law, “Gensler Lags Predecessors in SEC Rulemaking as ESG Plans Linger”(Aug. 29, 2023), available at https://www.bloomberglaw.com/product/blaw/bloomberglawnews/securities-law/
5
See Gary Gensler, “‘Competition and the Two SECs’: Remarks Before the SIFMA Annual Meeting” (Oct. 24,2022), available at https://www.sec.gov/news/speech/gensler-sifma-speech-102422.
6
See Securities and Exchange Commission, “SEC Proposes Rule to Provide Transparency in the Securities Lending
Market” (Nov. 18, 2021), available at https://www.sec.gov/news/press-release/2021-239.
7
See Securities and Exchange Commission, “SEC Proposes Short Sale Disclosure Rule, Order Marking
Requirement, and CAT Amendments” (Feb. 25, 2022), available at https://www.sec.gov/news/press-release/202232.
8
See Securities and Exchange Commission, “SEC Proposes Rules to Prevent Fraud in Connection With SecurityBased Swaps Transactions, to Prevent Undue Influence over CCOs and to Require Reporting of Large SecurityBased Swap Positions” (Dec. 15, 2021), available at https://www.sec.gov/news/press-release/2021-259.
9The Federal Reserve Board’s 2019 Survey of Consumer Finance finds that 53 percent of families own stock.
“Family” as used in the Survey is similar to “household” as defined in Census data. Census data in 2019 estimatedthat there are 128.6 million households in the U.S; 53 percent of this figure is approximately 68 million households.
See Federal Reserve Board, “Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey ofConsumer Finances,” available at https://www.federalreserve.gov/publications/files/scf20.pdf. See also UnitedStates Census Bureau, “Historical Household Tables” (Nov. 2022), available athttps://www.census.gov/data/tables/time-series/demo/families/households.html.
43

significant share of the markets has moved to wholesalers and other means of trading off exchange,otherwise known as the dark markets.
First, we issued for public comment a proposal that broker-dealers meet a Commission best
execution standard—in essence, that broker-dealers seek the best execution for investors when
they buy or sell securities. As proposed, this rule would cover all sectors of the securities markets,
including equity, fixed-income, and crypto asset securities. 10
Second, we proposed updating a 23-year-old rule, known as Rule 605, on disclosure oforder execution quality. 11
Third, we have a proposal to better level the playing field between dark and lit markets.
We are seeking to harmonize the minimum price increment where stocks can be quoted andtransacted as well as lower these minimum increments across the markets. 12
Lastly, we put out a proposal to bring greater competition for a segment of the market
related to individual investors’ marketable orders. 13
Private Funds
Last month, we finalized a rule that, among other things, will require private fund advisers
registered with the Commission to provide detailed disclosure to investors regarding fees,
expenses, and performance. 14 Further, the rule addressed certain sales practices, conflicts, andcompensation schemes of advisers to private funds. Enhancing advisers’ transparency and integrity
promotes greater competition and thereby efficiency in this important part of the markets.
Private funds and their advisers play a significant role for investors and issuers. They play
an important role in nearly every sector of the capital markets. On one side are the funds’ investors,
such as retirement plans or endowments. Standing behind those entities are millions of investors
like municipal workers, teachers, firefighters, professors, students, and more. On the other side areissuers raising capital from private funds, ranging from startups to late-stage companies.
After the 2008 financial crisis, Congress understood the important role that private funds
and advisers play. In the Dodd-Frank Act of 2010, Congress effectively required most private fundadvisers to register with the Securities and Exchange Commission. Congress also gave theCommission specific new authorities under the Investment Advisers Act of 1940 to prohibit or
See Securities and Exchange Commission, “SEC Proposes Regulation Best Execution” (Dec. 14, 2022), available
at https://www.sec.gov/news/press-release/2022-226.
11
See Securities and Exchange Commission, “SEC Proposes Amendments to Enhance Disclosure of Order
Execution Information” (Dec. 14, 2022), available at https://www.sec.gov/news/press-release/2022-223.
12
See Securities and Exchange Commission, “SEC Proposes Rules to Amend Minimum Pricing Increments andAccess Fee Caps and to Enhance the Transparency of Better Priced Orders” (Dec. 14, 2022), available athttps://www.sec.gov/news/press-release/2022-224.
13
See Securities and Exchange Commission, “SEC Proposes Rule to Enhance Competition for Individual Investor
Order Execution” (Dec. 14, 2022), available at https://www.sec.gov/news/press-release/2022-225.
14
See Securities and Exchange Commission, “SEC Enhances the Regulation of Private Fund Advisers” (Aug. 23,2023), available at https://www.sec.gov/news/press-release/2023-155.
104

restrict advisers’ sales practices, conflicts, and compensation schemes. 15 This built upon our
existing authorities to regulate advisers with respect to their books and records as well as withrespect to fraudulent, deceptive, or manipulative practices, among others. 16
The final rule was adjusted in multiple ways based on public feedback on the proposal. 17
Integrity and Disclosure
Market integrity and disclosure help protect investors and build trust in capital markets.
Such trust helps lower the cost of capital for issuers and enhance returns for investors. It also helps
increase participation in the capital markets. This is good for those investing for their future andfor issuers. Integrity and disclosure facilitate what can be the best of capital markets and guard
against the worst.
In this context, we have completed rules related to how insiders trade and sell their stock;18
clawing back senior executives’ compensation when based on faulty financials; 19 disclosure of
executive pay versus performance; 20 stock buybacks; 21 as well as regarding fraud andmanipulation in the security-based swaps market. 22
We also have issued proposals with regard to special purpose acquisition companies, 23
investment fund names, 24 beneficial ownership disclosure, 25 and funds and advisers thatincorporate environmental, social, and governance factors. 26
In the wake of the Bernie Madoff scandal, Congress in the Dodd-Frank Act gave the SEC
updated authorities that investment advisers should safeguard all client assets over which they have
Section 913(g)(2) of the Dodd-Frank Act added section 211(h) to the Advisers Act.
See, e.g., Advisers Act sections 206 and 204.
17
See Gary Gensler, “Statement on Private Fund Advisers” (Aug. 23, 2023) available athttps://www.sec.gov/news/statement/gensler-statement-private-fund-advisers-082323.
18
See Securities and Exchange Commission, “SEC Adopts Amendments to Modernize Rule 10b5-1 Insider Trading
Plans and Related Disclosures” (Dec. 14, 2022), available at https://www.sec.gov/news/press-release/2022-222.
19
See Securities and Exchange Commission, “SEC Adopts Compensation Recovery Listing Standards andDisclosure Rules” (Oct. 26, 2022), available at https://www.sec.gov/news/press-release/2022-192.
20
See Securities and Exchange Commission, “SEC Adopts Pay Versus Performance Disclosure Rules” (Aug. 22,2022), available at https://www.sec.gov/news/press-release/2022-149.
21
See Securities and Exchange Commission, “SEC Adopts Amendments to Modernize Share Repurchase
Disclosure” (May 3, 2023), available at https://www.sec.gov/news/press-release/2023-85.
22
See Securities and Exchange Commission, “SEC Adopts Rules to Prevent Fraud in Connection with SecurityBased Swaps Transactions and Prevent Undue Influence over CCOs” (June 7, 2023), available athttps://www.sec.gov/news/press-release/2023-104.
23
See Securities and Exchange Commission, “SEC Proposes Rules to Enhance Disclosure and Investor Protection
Relating to Special Purpose Acquisition Companies, Shell Companies, and Projections” (March 30, 2022), available
at https://www.sec.gov/news/press-release/2022-56.
24
See Securities and Exchange Commission, “SEC Proposes Rule Changes to Prevent Misleading or Deceptive
Fund Names” (May 25, 2022), available at https://www.sec.gov/news/press-release/2022-91.
25
See Securities and Exchange Commission, “SEC Proposes Rule Amendments to Modernize Beneficial Ownership
Reporting” (Feb. 10, 2022), available at https://www.sec.gov/news/press-release/2022-22.
26
See Securities and Exchange Commission, “SEC Proposes to Enhance Disclosures by Certain Investment
Advisers and Investment Companies About ESG Investment Practices” (May 25, 2022), available athttps://www.sec.gov/news/press-release/2022-92.
15
16

5

custody—not just funds or securities. Thus, earlier this year, the Commission proposed to expand
and enhance the role of qualified custodians when registered investment advisers custody assets
on behalf of their investors. 27
I’m going to discuss two areas of emerging technology, predictive data analytics andcrypto, and then turn to two issuer disclosure rules regarding climate and cyber risks.
Artificial Intelligence and Predictive Data Analytics
We live in an historic, transformational age regarding predictive data analytics and the useof artificial intelligence. As we further automate pattern recognition and parts of human
intelligence itself, this can create great efficiencies across the economy.
Today’s predictive data analytics models also provide an increasing ability to makepredictions about each of us as individuals. Such analytics and narrowcasting have the potential
benefits of greater financial inclusion and enhanced user experience.
This also raises the possibilities that conflicts may arise to the extent, for example, thatadvisers or broker-dealers are optimizing to place their interests ahead of their investors’ interests.
If a firm’s optimization function takes the interest of the firm into consideration as well as theinterest of the investor, this can lead to conflicts of interest.
In July, we put out a proposal to require firms to analyze conflicts of interest that may
emerge when using predictive data analytics to interact with investors. 28 Firms would need to
identify any such conflicts that result in an investor interaction that places the firm’s interests aheadof investors’ interests. Firms then would need to eliminate or neutralize the effects of thoseconflicts.
CryptoThere is nothing about the crypto asset securities markets that suggests that investors andissuers are less deserving of the protections of our securities laws.
Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks
and bonds. Yet Congress included a long list of 30-plus items in the definition of a security,
including the term “investment contract.” As I’ve previously said, without prejudging any one
token, the vast majority of crypto tokens likely meet the investment contract test.
Given that most crypto tokens are subject to the securities laws, it follows that most crypto
intermediaries have to comply with securities laws as well.

See Securities and Exchange Commission, “SEC Proposes Enhanced Safeguarding Rule for Registered
Investment Advisers (Feb. 15, 2023), available at https://www.sec.gov/news/press-release/2023-30.
28
See Securities and Exchange Commission, “SEC Proposes New Requirements to Address Risks to Investors From
Conflicts of Interest Associated With the Use of Predictive Data Analytics by Broker-Dealers and Investment
Advisers” (July 26, 2023), available at https://www.sec.gov/news/press-release/2023-140.
27

6

These laws have been on the books for decades. Sections 5, 15(a), and 17A(b) of the
Securities Exchange Act of 1934 require that intermediaries acting as securities exchanges, brokers
and dealers, and clearing agencies are subject to the securities laws, and must register or satisfy
requirements for an exemption.
Given this industry’s wide-ranging noncompliance with the securities laws, it’s not
surprising that we’ve seen many problems in these markets. We’ve seen this story before. It’s
reminiscent of what we had in the 1920s before the federal securities laws were put in place.
Thus, we have brought a number of enforcement actions—some settled, and some inlitigation—to hold wrongdoers accountable and promote investor protection.
The SEC also has addressed the crypto security markets through rulemaking. We issued areopening release that reiterated the applicability of existing rules to platforms that trade crypto
asset securities, including so-called “DeFi” systems. This release also provided supplemental
information for systems that would be included in a new, proposed exchange definition. 29
While our current investment adviser custody rule already applies to crypto funds andsecurities, our proposal updating it would cover all crypto assets and enhance the protections that
qualified custodians provide. 30
These are just two examples of the rules we’ve proposed that touch the crypto markets.
While I’m happy to discuss the SEC’s work, I will not be able to comment on any active,
ongoing litigation.
Climate Risk Disclosure
The SEC has no role as to climate risk itself. We, however, do have an important role inhelping to ensure that public companies make full, fair, and truthful disclosure about the material
risks they face.
Our federal securities laws lay out a basic bargain in our markets. Investors get to decide
which risks to take, so long as public companies raising money from the public make what
President Franklin Roosevelt called “complete and truthful disclosure.”
Under the securities laws, the SEC is merit neutral. Investors get to decide what
investments they make and risks they take based upon those disclosures. The SEC focuses on thedisclosures about, not the merits of, the investment.

See Securities and Exchange Commission, “SEC Reopens Comment Period for Proposed Amendments to
Exchange Act Rule 3b-16 and Provides Supplemental Information” (April 14, 2023), available athttps://www.sec.gov/news/press-release/2023-77.
30
See Securities and Exchange Commission, “SEC Proposes Enhanced Safeguarding Rule for Registered
Investment Advisers” (Feb. 15, 2023), available at https://www.sec.gov/news/press-release/2023-30.
29

7

Already today, issuers are making climate risk disclosures, and investors are making
investment decisions based on those disclosures. Indeed, a majority of the top thousand issuers bymarket cap already make such disclosures, including what’s known as Scope 1 and Scope 2
greenhouse gas emissions. 31 Further, investors representing tens of trillions of dollars in assets aremaking decisions relying on those disclosures.
Thus, in fulfilling the Commission’s important role, we put out for comment a proposal
about climate-related disclosure to bring consistency and comparability to such disclosures. 32
We are considering carefully the more than 15,000 comments we’ve received on the
proposal. We greatly benefit from public input and, given the economics and the law, will consider
adjustments to the proposed rule that the staff, and ultimately the Commission, think areappropriate in light of those comments.
Cyber Risk Disclosure
In July, we finalized rules regarding cybersecurity disclosures by public companies. 33 The
rules will require periodic disclosures regarding companies’ risk management, strategy, andgovernance with respect to cybersecurity risks. This will help investors more effectively assess
these risks and make informed investment decisions. The rules also will require disclosure ofmaterial cybersecurity incidents.
Based upon public feedback, the final rules were changed from the proposal in a numberof ways, streamlining required disclosures for both periodic and incident reporting. For example,
the final rules will require issuers to disclose an incident’s material impacts, nature, scope, andtiming, whereas the proposal would have required additional details, not explicitly limited bymateriality.
Further, based upon public comment, the adopting release included limited delays fordisclosures of material cybersecurity incidents that the U.S. Attorney General determines could
pose a substantial risk to national security or public safety. It provides that if the Attorney Generalindicates that further delay is necessary, the Commission will consider additional requests fordelay and may grant such relief through possible exemptive orders.

31
According to the Governance and Accountability Institute, 81 percent of Russell 1000 companies publishedsustainability disclosures in 2021 and 57 percent disclosed Scope 1 and 2 emissions. See Governance andAccountability Institute “New G&A Institute Research Shows Sustainability Reporting by Largest U.S. PublicCompanies Reached All-Time Highs in 2021” (Nov. 16, 2022), available athttps://www.globenewswire.com/en/news-release/2022/11/16/2557344/0/en/New-G-A-Institute-Research-ShowsSustainability-Reporting-by-Largest-U-S-Public-Companies-Reached-All-Time-Highs-in-2021.html. See also “TheEnhancement and Standardization of Climate-Related Disclosures for Investors,” Release No. 33-11042 (Mar. 21,2022), [87 FR 21334 (Apr. 11, 2022)].
32
See Securities and Exchange Commission, “SEC Proposes Rules to Enhance and Standardize Climate-Related
Disclosures for Investors” (March 21, 2022), available at https://www.sec.gov/news/press-release/2022-46.
33
See Securities and Exchange Commission, “SEC Adopts Rules on Cybersecurity Risk Management, Strategy,
Governance, and Incident Disclosure by Public Companies” (July 26, 2023), available athttps://www.sec.gov/news/press-release/2023-139.

8

Resiliency
History is replete with times when fires in one corner of the financial system or at one
financial institution spread to the broader economy. When this happens, the American public
inevitably gets hurt.
Such fires, though too many to name, have started from both the banking and nonbanking
sectors.
The financial fires of 2008 led to more than eight million Americans losing their jobs,
millions of families losing their homes, and small businesses across the country folding.
Promoting financial resiliency goes to the core of the SEC’s three-part mission. It’s theessence of fair, orderly, and efficient markets. In normal times, it helps promote trust in capital
markets. In times of stress, it protects investors and issuers alike.
Thus, I’m proud that the SEC has taken up a number of projects to enhance the resiliencyof our capital markets.
We already finalized a rule to shorten the settlement cycle in securities markets in half,
which lowers risk and promotes efficiency as well as greater liquidity in the markets. 34 We also
finalized a rule to enhance cross-market and off-exchange oversight for some of the most active
participants in the capital markets. 35
We have proposals with regard to clearinghouse governance, risk management, use ofservice providers, and recovery and wind-down plans. 36
We also have proposals related to cybersecurity and technological resiliency in thefinancial sector. 37
Separately, we also put out proposals for public comment on open-end fund liquidity. 38
I’d like to take a moment to elaborate on our work on Treasury markets, money market
funds, and private funds.
See Securities and Exchange Commission, “SEC Finalizes Rules to Reduce Risks in Clearance and Settlement”(Feb. 15, 2023), available at https://www.sec.gov/news/press-release/2023-29.
35
See Securities and Exchange Commission, “SEC Adopts Amendments to Exemption From National Securities
Association Membership” (Aug. 23, 2023), available at https://www.sec.gov/news/press-release/2023-154.
36
See Securities and Exchange Commission, “SEC Proposes Rules to Improve Clearing Agency Governance and to
Mitigate Conflicts of Interest” (Aug. 8, 2022), available at https://www.sec.gov/news/press-release/2022-138.
37
See Securities and Exchange Commission, “SEC Proposes Cybersecurity Risk Management Rules andAmendments for Registered Investment Advisers and Funds” (Feb. 9, 2022), available athttps://www.sec.gov/news/press-release/2022-20. See also “SEC Proposes New Requirements to Address
Cybersecurity Risks to the U.S. Securities Markets” (March 15, 2023), available at https://www.sec.gov/news/pressrelease/2023-52. See also “SEC Proposes to Expand and Update Regulation SCI” (March 15, 2023), available athttps://www.sec.gov/news/press-release/2023-53.
38
See Securities and Exchange Commission, “SEC Proposes Enhancements to Open-End Fund Liquidity
Framework” (Nov. 2, 2022), available at https://www.sec.gov/news/press-release/2022-199.
34

9

Treasury Markets
The $25 trillion Treasury markets 39 are the base upon which so much of our capital markets
are built. Myriad markets and financial products are priced off of treasuries. Treasuries areembedded in money market funds. They are integral to monetary policy. They are how we, as agovernment and as taxpayers, raise money: We are the issuer.
Though Roosevelt and Congress initially didn’t give the SEC a significant role in the
Treasury markets, market events and failures at government securities firms in the early 1980s led
Congress to give us an important role with regard to these markets. 40 In normal times these markets
function well, but they have had repeated moments of instability, whether the flash crash in 2014,
problems in the Treasury funding markets in 2019, or the dash for cash in 2020. Events in the
Treasury markets this year are yet again a reminder that even the vast Treasury markets canexperience significant volatility and lessened liquidity.
All of this is why the SEC has worked with the Department of the Treasury, the Federal
Reserve System, and other agencies to enhance the efficiency and resiliency of the Treasury
markets. 41 These proposals include registering and regulating Treasury dealers and platforms, aswell as facilitating greater clearing of treasuries in both cash and funding markets. 42
Money Market Funds
In July, we adopted a rule to enhance money market funds’ liquidity and investor
protection. 43 It will enhance these funds’ resiliency and ability to protect against dilution.
Money market funds—nearly $6 trillion in size today—provide millions of Americans witha deposit alternative to traditional bank accounts. Using these funds, shareholders can get marketbased returns, fully backed dollar-for-dollar by readily marketable securities.

See Securities Industry and Financial Markets Association, “US Treasury Securities Statistics” available athttps://www.sifma.org/resources/research/us-treasury-securities-statistics/.
40
See Gary Gensler, “Prepared Remarks at U.S. Treasury Market Conference” (Nov. 17, 2021), available athttps://www.sec.gov/news/speech/gensler-us-treasury-market-conference-20211117.
41
See Gary Gensler, “‘The Beatles and the Treasury Market’: Remarks Before the U.S. Treasury Market
Conference” (Nov. 16, 2022), available at https://www.sec.gov/news/speech/gensler-speech-treasury-marketconference-111622.
42
See Securities and Exchange Commission, “SEC Proposes Rules to Improve Risk Management in Clearance andSettlement and to Facilitate Additional Central Clearing for the U.S. Treasury Market” (Sept. 14, 2022), available athttps://www.sec.gov/news/press-release/2022-162. See also “SEC Proposes Amendments to Include Significant
Treasury Markets Platforms Within Regulation ATS” (Jan. 26, 2022), available at https://www.sec.gov/news/pressrelease/2022-10. See also “SEC Reopens Comment Period for Proposed Amendments to Exchange Act Rule 3b-16
and Provides Supplemental Information” (April 14, 2023), available at https://www.sec.gov/news/pressrelease/2023-77. See also “SEC Proposes Rules to Include Certain Significant Market Participants as “Dealers” or“Government Securities Dealers’” (March 28, 2022), available at https://www.sec.gov/news/press-release/2022-54.
43
See Securities and Exchange Commission, “SEC Adopts Money Market Fund Reforms and Amendments to FormPF Reporting Requirements for Large Liquidity Fund Advisers” (July 12, 2023), available athttps://www.sec.gov/news/press-release/2023-129.
39

10

Money market funds, though, have a potential structural liquidity mismatch. Investors canredeem their money market fund holdings on a daily basis, even if those funds keep some of theirholdings in securities with less liquidity.
As a result, when markets enter times of stress, some investors—fearing dilution or
illiquidity—may try to escape the bear. 44 This can lead to large amounts of rapid redemptions. We
have observed this play out in times of stress, including during the 2008 financial crisis and the“dash for cash” in March 2020. Left unchecked, such stress can undermine these critical funds.
Taking into account public comment, the final money market fund rules, as adopted, will
require liquidity fees instead of the originally proposed swing pricing requirement. Liquidity fees,
compared with swing pricing, offer many of the same benefits and fewer of the operationalburdens.
Form PFIn response to the 2008 crisis, Congress mandated that the SEC and the Commodity Futures
Trading Commission (CFTC), working with the member regulators of the Financial Stability
Oversight Council (FSOC), establish reporting requirements for private funds “as necessary andappropriate in the public interest and for the protection of investors, or for the assessment ofsystemic risk.” 45 Thus, in 2011, along with the CFTC, we created Form PF, an important tool the
Commission uses to oversee private fund advisers.
In the 12 years since we first adopted Form PF, private funds have evolved significantly intheir business practices, complexity, and investment strategies. Private funds today are ever moreinterconnected with our broader capital markets.
Private funds nearly have tripled in size in the last decade to approximately $26 trillion46
in gross assets. This compares to the U.S. commercial banking industry of approximately $23
trillion.47 This makes visibility into these funds critical.
In May, we finalized a rule amending Form PF. 48
Among other things, the final rule requires, for the first time, that large hedge fund andprivate equity fund advisers make current reports on certain events to the Commission. These new,more-timely reports—within 72 hours from large hedge fund advisers and quarterly from private
equity fund advisers—will inform financial regulators on certain events that may indicate
significant stress or otherwise signal for systemic risk or investor harm.
See Gary Gensler, “Bear in the Woods” Remarks before the Investment Company Institute” (May 25, 2023),
available at https://www.sec.gov/news/speech/gensler-remarks-investment-company-institute-05252023.
45
15 U.S.C. 80b-4(b); see also 15 U.S.C. 80b-11(e).
46
Staff analysis of Form ADV data, inclusive of assets attributable to securitized asset funds, as of year-end 2022.
47
See Board of Governors of the Federal Reserve System, “Assets and Liabilities of Commercial Banks in the
United States” (Sept. 1, 2023), available at https://www.federalreserve.gov/releases/h8/current/default.htm. Total
assets of approximately $22.8 trillion as of Aug. 23, 2023 (Table 2, Line 33).
48
See Securities and Exchange Commission, “SEC Adopts Amendments to Enhance Private Fund Reporting” (May3, 2023), available at https://www.sec.gov/news/press-release/2023-86.
44

11

These amendments will improve visibility into private funds, helping protect investors andpromote financial stability.
We also have a joint proposal with the CFTC to improve the quality of the information we
receive from all Form PF filers, with a particular focus on large hedge fund advisers. The staffs of
the SEC and CFTC are currently reviewing comments that we received on this proposal and areworking on a potential joint recommendation for their respective commissions.
Conclusion
Though we are blessed with the largest, most sophisticated, and most innovative capital
markets in the world, even a gold medalist must keep training.
Technology, markets, and business models continue to change dramatically. We now livein the age of electronic trading and generative AI. We’ve had dramatic growth in the scale, size,
and interconnectedness of our capital markets, with individual investors participating more thanever before. Further, there are other fast-growing economies that, if they can, may seek to supplantus.
I am grateful to work alongside this remarkable staff and my fellow Commissioners topromote the efficiency, integrity, and resiliency of the markets.

12