I want to welcome everyone to the first meeting of the Equity Market Structure Advisory Committee (“Committee”). I look forward to hearing your thoughtful and informed views on the topic of market structure.

Earlier this week, on May 11^th, I publicly released a statement that discussed in detail certain key aspects of our equity market structure, particularly the issues of market fragmentation and competition for order flow.[2] I have shared this discussion with the members of this Committee, and I hope you will find it helpful. Given the length of that document, I thought it best to keep my remarks today brief.

Clearly, our equity markets have witnessed profound changes in recent years, and the result has been a market structure that is tremendously complex, highly interrelated, and constantly evolving. These characteristics make clear that any analysis of our markets is a challenging task. This underscores the critical role that this Committee will play in helping the Commission navigate the many difficult issues that have arisen in recent years.

Our current market structure embodies a series of trade-offs that elevate certain policy goals above others, and which benefit certain market participants more than others.[3] Some of these trade-offs are, perhaps, unavoidable. That doesn’t mean, however, that they cannot be managed and fully disclosed. I look forward to the Committee’s ideas on how these trade-offs should be addressed.

More importantly, as the Committee conducts its deliberations, I ask the members to keep in mind the indisputable fact that our equity markets need to be structured, first and foremost, to meet the needs of investors and issuers.[4] These market participants are the very reason our equity markets exist, and it is their interests that need to come first.

In fact, I urge the Committee to begin its deliberations by asking a simple question: How can our markets better serve investors and issuers? It is the answer to this question that should drive the Committee’s agenda. I further urge the Committee to view each of the issues it considers, not from the industry’s perspective, but from the perspective of investors and issuers. An analysis that begins with the needs of investors and issuers is the key to ensuring that the Committee’s discussions are not vulnerable to vested interests.

To that end, I cannot help but note that this Committee is composed mainly of representatives from the financial industry, rather than investors and issuers. Accordingly, for this Committee to fulfill our high expectations, it will be important for members who are affiliated with financial firms to check their business interests at the door, and focus on identifying a market structure that works for investors and issuers—not for their firms’ bottom lines. Simply stated, the Committee should focus on what’s good for investors and issuers and not on what market structure changes put more money in its pockets. This Committee is a form of public service, and public service is a public trust, one that requires us to place the public interest above our own personal gain.[5] I am a realist and recognize this won’t be easy, but I am sufficiently optimistic to believe that each of you will do the right thing.

And, clearly, we need your best and most objective guidance. Although our equity markets appear to be working well by many measures, there are some aspects of our markets that require immediate attention. Indeed, this is the very reason this Committee was convened. In my May 11^th statement, I discussed some of the more pressing issues, such as:

• The need to closely monitor whether the fragmentation of our equity markets is approaching a tipping point, where the rising number of lit and dark trading venues may be impairing our markets’ ability to discover prices efficiently.[6]
• The importance of providing brokers with better guidance on how to deliver best execution in a highly decentralized marketplace that is dominated by speed-of-light trading.[7]
• The importance of defending the order protection rule against efforts to limit its reach to exchanges that meet a certain market-share threshold.[8]
• The importance of updating the rules governing the disclosure of order routing practices and execution quality, which have severely lagged industry developments.[9]
• And, the need to develop a pilot program to test whether a limited trade-at restriction would improve market quality.[10]

These are some of the matters discussed in more detail in my May 11^th statement. Of course, the statement was quite long with 184 footnotes so I’m leaving a lot out this morning. In deference to time considerations this morning, I’ll stop now.

But let me end by again thanking the Committee members for their assistance as the Commission tackles some of the most complicated issues confronting our markets today.

Thank you.