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Yellen hails resilience of financial markets in GameStop turmoil
US Treasury Secretary Janet Yellen. File photo: Reuters.

(ATF) The core infrastructure of financial markets proved resilient during recent high volatility and heavy trading volume involving GameStop and other assets, US Treasury Secretary Janet Yellen and top regulators agreed on Thursday February 4. The statement signals no sudden changes to market regulation.

Regulators underscored the importance of the Securities and Exchange Commission (SEC) releasing a timely study of the events, the US Treasury said after a meeting convened by Yellen on Thursday to review the trading frenzy.

The SEC and Commodities Futures Trading Commission (CFTC) are now reviewing whether the trading practices were consistent with investor protection and fair and efficient markets, the Treasury said in a statement.

Yellen and the heads of the SEC, CFTC, the Federal Reserve Board and the Federal Reserve Bank of New York (which handles many market structure issues for the Federal Reserve system) discussed market functionality and recent trading practices in equity, commodity and related markets during the meeting, the Treasury said.

“The regulators believe the core infrastructure was resilient during high volatility and heavy trading volume and agree on the importance of the SEC releasing a timely study of the events,” it said.

“Secretary Yellen believes it is imperative to uphold the integrity of these markets and ensure investor protection.”

Yellen earlier said in a TV interview that she and financial market regulators were seeking to “understand deeply” what had happened before considering action.

Yellen may not want to make any sudden moves to push for changes in a US regulation, but Biden’s nominee for chair of the SEC, Gary Gensler, may take a different approach once he is confirmed.

There is growing pressure for examination of the mechanics of payment for order flows on trading platforms by market makers such as a Citadel Securities, and political input – including at Congressional hearings on February 18 – is likely to ensure that supervisors remain under scrutiny along with market participants.

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