Gamestop – Exchange leaders say GameStop saga highlights regulatory challenges
ALEX LOWE, 06 July 2021
NEW YORK (Reuters) – The recent trading frenzy around GameStop Corp and other so-called “meme” stocks highlights shortcomings and challenges in the U.S. markets as retail investors become a bigger presence, exchange leaders said on Tuesday.
“The regulatory structure of the U.S. equity markets, in my mind, is flawed,” Jeff Sprecher, chief executive of New York Stock Exchange owner Intercontinental Exchange Inc, said on a panel at the Future Industry Association’s virtual FIA Boca conference.
Regulators have focused on competition between market intermediaries, like brokers and exchanges, rather than between buyers and sellers seeking to get the best prices, and the GameStop event exposed issues with that structure, he said.
In January, retail investors coordinated through social media forums in an attempt to punish hedge funds by buying shares of GameStop and other heavily shorted names, driving up their prices and forcing short sellers to close out positions at big losses.
At the height of the trading mania, several retail brokers restricted the buying of GameStop after collateral requirements needed to clear the trades spiked, angering many traders.
