SEC's Vision for Competition in Markets Would Stifle Innovation
We are living in an era of radical new financial concepts, and cookie-cutter regulation only reduces choices by investors, businesses and intermediaries.
SEC Chair Gary Gensler has some unusual ideas about competition.
Photographer: Kevin Dietsch/Getty Images
Securities and Exchange Commission Chair Gary Gensler recently gave a speech called “Competition and the Two SECs.” It should been called “The SEC and Two Competitions.” To most people, competition is something that happens in the market. Buyers and sellers do what they want, and intermediaries offer innovations that either succeed or fail. The job of regulators is not to pick winners and losers, nor to limit choices, but to set general rules and to stop illegal practices. To Gensler, it seems, competition is the opposite. It’s something set by regulators, who tell buyers, sellers and intermediaries what to do, in order to make markets work the way regulators think best.
The difference is illustrated with the two sports analogies Gensler uses. In cross-country races, there are few rules. You can’t ride a bicycle or shoot the other runners, but these serve to define the sport and enforce general laws, not to micromanage how competitors run. This is what most people call pure competition.