Gary Gensler, president Joe Biden’s choice to head the Securities and Exchange Commission, said he would hope to oversee cryptocurrency regulation, stock trading and board diversification if it is confirmed that he is the main regulator of Wall Street.
Gensler, who testified before the Senate Banking Committee on Tuesday, was excited about whether he would investigate the payment for order flow and game-like tactics used by some online brokers to lure customers to their platforms.
Both topics have received attention on Capitol Hill over the past two months following the wild trading in January in GameStop, AMC Entertainment and other stocks.
Senators, including Democratic Massachusetts Elizabeth Warren, asked Gensler in the virtual trial for his thoughts on Robinhood Markets, one of the most popular online trading programs.
Critics of Robinhood say the company is trying to attract young or inexperienced customers to trade with features on its trading platform that mimic gaming applications, such as virtual confetti when trading.
The SEC nominee has promised to analyze the increase in ‘gamification’ of stock trading and intervene if necessary.
He also noted possible problems with the current structure of payment flow orders, a common practice on Wall Street, in which trading companies such as Citadel Securities pay companies such as Robinhood to send their customers’ orders for execution to them.
We’re going to ‘look at the market structure in the stock markets around order flow payments when, frankly, only a few – a handful – of financial firms buy the bulk of the retail flow in America,’ Gensler said on Tuesday.
Former Goldman Sachs partner and former head of Commodity Futures Trading Commission also raised questions about cryptocurrency, blockchain and bitcoin. As a professor at MIT’s Sloan School of Management, Gensler teaches digital currencies and blockchain.
Asked how the SEC should oversee such emerging technologies, he replied that responsibility could fall on the government, depending on how assets such as bitcoin are classified.
“To the extent that someone offers an investment contract or security that is under the SEC’s jurisdiction, and has their stock exchange working there, we need to make sure there is investor protection,” he said.
“If it’s not, and it’s a commodity, as bitcoin is considered, then it’s a question for Congress … or it’s possibly a question for the Commodity Futures Trading Commission.” He added.
Other legislators, such as the committee chair, sen. Sherrod Brown, D-Ohio, asked Biden’s choice to lead the SEC on how he thinks the regulator should prioritize climate change.
“Investors increasingly want to see tens of billions of dollars’ worth of assets behind it,” Gensler said of climate-friendly investments. “They want to see information on climate risk. I think issuers will benefit from such guidance.”
Rank member Sen. Pat Toomey, R-Pa., Asked Gensler’s thoughts on Nasdaq’s pressure to increase diversity on corporate boards.
He and other Republicans rejected a recent plan the exchange operator submitted to the SEC that required thousands of companies listed on the stock exchange to include women, racial minorities and LGBT individuals on their boards.
Toomey asked Gensler if he believed boards should be “forced or pressured to meet some sort of quota with respect to race, gender or sexual orientation.”
Gensler responded by addressing the benefits of diversity wider and among the ranks at the SEC.
“I think diversity in boards and diversity in senior leadership … benefits from decision-making, and that’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, if confirmed, will begin.”