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As the SEC Calls for a Market Structure Overhaul, New Study Shows Today's Markets More Cost-Effective Than Ever for Retail Investors


A new report issued today by the Modern Markets Initiative ("MMI"), a non-profit education and advocacy organization for innovation in today's markets, found that advances in market automation are resulting in record savings in trading costs for investors across the retail spectrum.

The study, "Stability in Turbulent Times: A Quantitative Analysis of the Liquidity and Narrowed Bid-Ask Spreads Provided by Automated Trading" reviews the history automated trading and analyzes multiple savings vehicles utilized by American investors, including 401(k) plans, Individual Retirement Accounts (IRAs), 529 college savings plans, public pension plans, ABLE plans, and ETFs to document the benefits of market automation in saving investors' money with lower trading costs and narrower bid-ask spreads.

Data from the study shows:

The efficiency and effectiveness of the modern markets in the United States is in large part due to innovation, the report states. Market innovation has resulted in faster trade execution, more precise pricing, more money saved for retirement faster, a diversified product set, and new opportunities for hedging.

In the past few years, the U.S. equities markets have been tested with historic volatility. Despite this turbulence, the equities markets have functioned as intended, with the markets remaining open for price discovery, with dependable liquidity from HFT automated trading firms, and with retail investors able to get in and out of their positions.

"This report should be a valuable source of data for the SEC while it considers market structure changes. In short, retail investors have never had it better. While the U.S. markets are the best they've ever been and the envy of the world, it is important to continue technical innovation and ensure the SEC proposals don't wind back the clock. Regulatory policies should be data-driven and consider the interests of the wide cross section of industry participants," said Modern Markets Initiative CEO Kirsten Wegner.



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