Reforming U.S. Capital Markets to Promote Economic Growth

Vibrant and well-functioning U.S. capital markets create jobs, bolster investment, promote innovation, and enhance retirement savings. Capital markets function best when regulations allow for the efficient allocation of capital while protecting investors. In this report, we evaluate major trends and developments in U.S. capital markets and assess whether existing regulations are continuing to serve U.S. […]

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An Analysis of Investment Stewardship: Mutual Funds and ETFs

Investment stewardship refers to shareholder engagement with public companies, including voting and other direct communications between investors and public companies. This report focuses on investment stewardship by investment advisers on behalf of mutual funds and ETFs with a focus on index funds. We begin by reviewing the existing regulatory requirements and the voluntary investment stewardship […]

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The Rise of Index Investing: Price Efficiency and Financial Stability

Index investing is based upon a set of predefined, mechanical rules for choosing a publicly known set of stocks. The strategy of index investors is to gain exposure to the performance of the market as a whole or a particular segment of the market. Given its mechanical, rules-based nature, index investing does not require investment […]

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Wall Street Journal Op-Ed: Who’s Looking Out for Main Street? Treasury and the Fed seem more concerned about not losing money than getting relief to small businesses.

Originally Appeared in the Wall Street Journal Small and midsize businesses have been hit hard by the pandemic, but they aren’t getting the help they need. Why, when the Cares Act provides direct assistance to the Treasury to assist these firms? Congress now has a chance to get to the bottom of it. On Tuesday […]

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Committee Submits Comment Letter on SEC’s Market Data Infrastructure Proposal

On April 23, the Committee submitted a comment letter to the Securities and Exchange Commission (the “SEC”) regarding its proposal to introduce competition among providers of consolidated equity market data for national market system stocks (the “Competition Proposal”). The Committee supports the Competition Proposal, because we believe it will improve the quality and decrease the […]

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Committee Submits Comment Letter on IEX Proposal to Add a New Discretionary Limit Order Type

On April 23, the Committee submitted a comment letter to the Securities and Exchange Commission (the “SEC”) regarding a proposed rule change by the Investors Exchange LLC (“IEX”). IEX’s proposal would create “discretionary limit orders” that are effectively exempt from its existing speed bump.  It would thereby potentially establish an asymmetric speed bump. The Committee […]

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The Wall Street Journal Op-Ed: Main Street Needs More Fed Help: Right now, getting aid to small businesses is more important than protecting the Treasury’s investment.

Originally Appeared in the Wall Street Journal The U.S. economy is in free fall. Leading economic forecasters predict as much as an 11% year-over-year decline in second-quarter gross domestic product. Small businesses—those with under 500 employees, which constitute 50% of the workforce and 44% of GDP—have closed their doors and are teetering from illiquidity to […]

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The Wall Street Journal Op-Ed: The Fed Needs to Move Faster: The central bank’s announcements have stabilized markets—for now—but its Main Street lending facility has too many limits and complications.

Originally Appeared in the Wall Street Journal The Federal Reserve has become the first responder for the U.S. economy. Normally, the Fed is concerned with the safety of the financial system. But its fate as an independent central bank may turn on whether it can preserve the real economy. To succeed, the Fed needs to […]

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Short-Termism, Shareholder Activism and Stock Buybacks

According to the short-termism thesis, public companies in the United States are excessively focused on increasing short-term stock prices and are therefore foregoing valuable long-term investment. We evaluate the evidence to support the short-termism thesis including the role of shareholder activism and stock buybacks by public companies. The first section of the report focuses on […]

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The Rise of Dual Class Shares: Regulation and Implications

Shares of common stock in corporations represent a bundle of rights: economic rights, such as the rights to receive dividends declared by the corporation, and governance rights, including the right to vote on certain corporate decisions. These rights are typically allocated proportionally, with each share of common stock entitled to the same economic and voting […]

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