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Speaker 1: Booking Trains. I'm Joel Webber and.

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Speaker 2: I'm Eric palchunas Eric.

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Speaker 1: Last week we got to do a really great interview

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Speaker 1: at the Bloomberg Intelligence ETF In Depth event where we

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Speaker 1: brought back one of our pandemic interviews, like very early

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Speaker 1: in the pandemic and talked to an SEC commissioner named

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Speaker 1: Hester Purse.

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Speaker 3: Yeah.

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Speaker 2: No, she's been a guest on Trillions before a couple

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Speaker 2: of years ago.

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Speaker 1: During the pandemic. We were in our closets.

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Speaker 2: Yes, and she's great. She's very open, you know, very

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Speaker 2: open for a SC commissioner, and I thought it was

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Speaker 2: a good way to end our event, which by the way,

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Speaker 2: the Index team and the BSKT team also kind of

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Speaker 2: sponsored the event. But it was a great event, full house.

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Speaker 2: We had two hundred fifty people there. It's the eighth

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Speaker 2: time we've done that event. And Trillions live recording closed

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Speaker 2: the event. So when you when you hear what you're

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Speaker 2: about to hear, just know this is in front of

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Speaker 2: a live audience, which you can tell. I think you you.

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Speaker 2: She kind of cracked people up a couple of times.

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Speaker 1: She's funny, she's got a good funny h and she

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Speaker 1: joined remote from Washington, d C. And we're also joined

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Speaker 1: by Katie Gryfeld ETF reporter with Bloomberg News, this time

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Speaker 1: on Trillions Live with Hester purs.

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Speaker 2: All right, the grand Finale, hopefully we deliver. Uh So,

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Speaker 2: this is a special situation here. We are going to

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Speaker 2: record a live episode of Trillions. So let me bring

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Speaker 2: up my co host, Joe Weber of Trillions and Katie Greyfeld,

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Speaker 2: who I co host ETFIQ with, but she's on Trillions

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Speaker 2: all the time. Anyway, let's bring them up and we

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Speaker 2: have a great interview plan for you. And this is live,

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Speaker 2: so let's keep the heckling limited, especially that guy over there.

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Speaker 1: Why don't you go here? And then we'll put her

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Speaker 1: over there. Well, we only do this on special occasions

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Speaker 1: where we do a live episode of Trillions. Usually for

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Speaker 1: the six years that Eric and I have been doing this,

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Speaker 1: we've been in studios for a lot of the time.

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Speaker 1: We've been in our closet or I guess my closet.

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Speaker 1: I've been in my closet.

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Speaker 2: You been in my closet. But he looks like the

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Speaker 2: Blair Witch Project movie, where is like it just is

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Speaker 2: really it's creepy.

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Speaker 1: Because that was the pandemic obviously, and we were recording

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Speaker 1: from home. That's not normal. We're back in the studio

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Speaker 1: mostly Katie Greifeld's often with us. It's cool that Hester

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Speaker 1: Purse is here today, though, because that was an episode

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Speaker 1: very very early in the pandemic when we weren't quite

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Speaker 1: sure what was going on in the world. And the

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Speaker 1: world's changed and we're sort of back to normal now

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Speaker 1: and we're going to talk to her about all things SEC.

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Speaker 1: So let's let's bring her out SEC. Commissioner Hester Purse.

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Speaker 4: There you go, Hi.

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Speaker 2: I think she can see only us, but yeah, there's

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Speaker 2: a big crowd here, so there you go.

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Speaker 5: High Hester, I can see only you, but I'm sure

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Speaker 5: I'll be able to hear.

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Speaker 1: The Okay, So, Hester, The question that I asked you

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Speaker 1: at the beginning of our interview with you last time

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Speaker 1: was are you baking banana bread or sour dough? Because

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Speaker 1: it was that point in the pandemic we were talking

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Speaker 1: like late May one, and you replied that banana bread

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Speaker 1: with chocolate chips is the only way to bake banana bread.

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Speaker 1: So I'm curious, what are you baking now?

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Speaker 5: This week? It was ginger snaps.

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Speaker 1: Wow, there you go. What's next week going to be?

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Speaker 5: Next week?

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Speaker 3: Because I'm going to be trying to put off doing work.

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Speaker 3: There will be bread, cookies, you name it.

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Speaker 1: Okay, that's great, all right.

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Speaker 5: It's my procrastinations. Cool.

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Speaker 2: I thought you guys were staying late to approve all

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Speaker 2: the spot bit hoityt filings.

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Speaker 5: Yeah. Nice, nice try there.

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Speaker 1: Okay, So let's just keep it going on bitcoin because

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Speaker 1: we have to ask who's going to be the first

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Speaker 1: ETF to get approved?

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Speaker 5: All right, So.

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Speaker 3: Before I get in to get tricked into answering any questions,

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Speaker 3: I'm going to tell you that my views are my

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Speaker 3: own views as a commissioner, not necessarily those of the

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Speaker 3: SEC or my fellow commissioners.

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Speaker 5: And as you might guess, I'm not going to answer

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Speaker 5: that question.

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Speaker 2: Okay, Okay, I'll try. We're all going to make make

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Speaker 2: attempts here. I want to go over this. It's been

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Speaker 2: ten years since the Winklevoss followed the ETF. You put

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Speaker 2: out rebuttals over the years that you thought this should happen.

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Speaker 2: I totally agreed with you. We're now at a point

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Speaker 2: where it looks like, because of the Greyscale ruling, that

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Speaker 2: something's happening. We've seen filings come back amended. We've seen

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Speaker 2: meetings where they publicly show that, oh, black Rock and

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Speaker 2: other issuers met with the Trading Commission's division. It just

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Speaker 2: seems like all signs are kind of pointing that direction.

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Speaker 2: Would you agree or is there something else we should

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Speaker 2: look for? Do you think this kind of engagement is

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Speaker 2: good for people who are looking to are hoping that

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Speaker 2: these do hit the market at some point?

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Speaker 3: I really am the wrong person to ask, because, as

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Speaker 3: you noted, I thought that we should have approved one

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Speaker 3: of these things over five years ago. So the fact

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Speaker 3: that we haven't done it yet is a mystery to me.

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Speaker 3: And trying to read the tea leaves is probably just

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Speaker 3: as hard for me. We're almost as hard for me

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Speaker 3: as it is for all of you.

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Speaker 6: And I guess as we watch this evolve, and really

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Speaker 6: we've really been on Bitcoin ETF watch, as Eric said,

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Speaker 6: for the past decade, but especially for the past six

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Speaker 6: months after that Blackrock refiling. Would you say at this

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Speaker 6: point that the ETF ecosystem is ready, and more importantly,

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Speaker 6: is the crypto ecosystem ready to handle this?

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Speaker 3: I mean, I thought it was ready five years ago,

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Speaker 3: so I don't think I think if anything that the

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Speaker 3: system is more ready. We have experienced with foreign jurisdictions

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Speaker 3: having tried similar things. We have experienced with products that

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Speaker 3: are not spot products but futures products. So yes, I

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Speaker 3: mean we're I think we have a lot of the

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Speaker 3: things in place that need to be in place, even

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Speaker 3: more than they were five years ago.

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Speaker 2: And when we talk about this Bitcoin ETF, part of

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Speaker 2: it is the ETF vehicle. And I guess is was

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Speaker 2: your confidence back then partially rooted in the fact that

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Speaker 2: the ETF vehicle is robust and had a track record

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Speaker 2: of being able to put all kinds of stuff in

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Speaker 2: it and simply, you know, use the power of arbitrage

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Speaker 2: to keep the price close to the nave And did

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Speaker 2: that track record factor into that?

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Speaker 3: Yeah, I mean, I think that's absolutely right. ETFs have

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Speaker 3: shown themselves to be a really helpful part of the

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Speaker 3: market and a helpful way of bringing prices. You know,

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Speaker 3: as you said, it's an arbitrage mechanism allows people a

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Speaker 3: way to express their views about the value of things,

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Speaker 3: and I think that could be very useful in this market.

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Speaker 3: I should say that the facts and circumstances, of course,

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Speaker 3: will matter any any application for anything. We're considering we're

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Speaker 3: always going to be looking at the specific facts and circumstances,

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Speaker 3: but you know, in general, this is we're very familiar

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Speaker 3: with exchange traded products. We're now very familiar with the

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Speaker 3: underlying bitcoin.

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Speaker 5: So it seems to me that.

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Speaker 3: The reasons that I thought five years ago are still

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Speaker 3: there today. But again, talk to my colleagues, because I've

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Speaker 3: been an outlier.

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Speaker 1: Okay, so to get comfortable with that underlying bitcoin. How

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Speaker 1: much bitcoin did the SEC have to acquire?

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Speaker 3: Yeah, I think that you might want to talk to

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Speaker 3: other parts of the government that have acquired bitcoin through

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Speaker 3: through court actions.

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Speaker 1: Through those It's true that I get the US government

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Speaker 1: has acquired a bit of a bitcoin through some other means.

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Speaker 1: I'm curious though about this Pandora's box effects that this

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Speaker 1: opens up. Were you worried about that before five years ago?

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Speaker 1: As you mentioned, Is that still a concern among your

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Speaker 1: other commissioners? This what kind of response the fact that

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Speaker 1: you know, you open something up, you authorize approval for it,

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Speaker 1: but then we're going to have a whole other world

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Speaker 1: of crypto knocking on your door.

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Speaker 3: Look, you know, people can build products, Whether people will

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Speaker 3: come and buy them is another question, And I trust

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Speaker 3: that people who build products and spend a lot of

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Speaker 3: money doing it are going to think about whether there's

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Speaker 3: a market for what they're building.

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Speaker 5: That's really not our it's not our job. Our job

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Speaker 5: is to.

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Speaker 3: Look at the rules and to look to see whether

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Speaker 3: the products satisfy those rules. When I looked at at

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Speaker 3: the prior exchange traded product that we consider bitcoin exchange

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Speaker 3: traded products, I said, well, it looks to me very

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Speaker 3: similar to some of these other products we've approved, so

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Speaker 3: why not approve it.

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Speaker 5: That doesn't mean that people.

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Speaker 3: Will necessarily come and buy it, and so I think

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Speaker 3: I don't really worry about that because I think people.

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Speaker 5: Have market incentives to decide which products to bring.

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Speaker 4: To market and hester in this process.

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Speaker 6: It's been pretty amazing to just watch how much hype

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Speaker 6: there has been over even routine paperwork refilings, et cetera.

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Speaker 6: You will see the price of bitcoin pop occasionally when

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Speaker 6: someone refiles something, and it seems like what's really in

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Speaker 6: the zeitgeist right now is there's been a lot of

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Speaker 6: chatter about whether the SEC is going to give its

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Speaker 6: blessing to in kind redemptions or whether they're going to

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Speaker 6: require cash redemptions for spot bitcoin ETFs, the sort of

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Speaker 6: conversation there being that the SEC wouldn't want broker dealers

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Speaker 6: to actually be handling bitcoin itself, and for that reason

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Speaker 6: maybe that they would FA for cash.

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Speaker 4: Can you bring us into any of that thinking, No.

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Speaker 3: I mean again, I really can't say where the conversations are.

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Speaker 3: I think people have been discussing memos that they've seen in.

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Speaker 5: The file and what the filings look like.

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Speaker 3: And that's normal as people are waiting to figure out

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Speaker 3: whether or not the approvals will happen, but what they'll

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Speaker 3: ultimately look like. I can't speculate on that. I can't

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Speaker 3: speculate on whether it'll be cash or in time.

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Speaker 2: And I was curious, as Katie mentioned, like someone updates

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Speaker 2: in nineteen before these filings have very wonky names, and

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Speaker 2: the thing blows up on Twitter, everybody is like getting excited,

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Speaker 2: actually moves the price. Again, we're talking about these filings

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Speaker 2: and the process. Do you guys see all this going

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Speaker 2: on or you kind of shielded from it? And is

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Speaker 2: it I mean, what is it unusual? I mean, I

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Speaker 2: think it's unusual that just these really I gotta be honest,

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Speaker 2: I really never cared that much about s ones I mean,

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Speaker 2: until the ETF was sent to us and we added

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Speaker 2: the DS page, I didn't really care. But over ten years,

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Speaker 2: these little tiny changes in filings are being like comb

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Speaker 2: through and it's become such an almost like pastime for

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Speaker 2: the past year. Yeah, do you guys watch this?

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Speaker 1: Do you see it?

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Speaker 4: Are you like? What do you think of it?

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Speaker 5: Well, I mean I've certainly seen that.

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Speaker 3: I've listened to a lot of crypto podcasts, and I'm

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Speaker 3: on Twitter, so I do, of course their X so

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Speaker 3: I do, of course.

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Speaker 5: See see that.

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Speaker 3: I think, you know, it reminds me of how unfortunate

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Speaker 3: it is that regulation ends up driving so much of

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Speaker 3: what happens, and speculation about regulation ends up.

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Speaker 5: Driving what happens.

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Speaker 3: I really do long for the day when crypto podcasts

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Speaker 3: don't spend forty percent of their time talking about regulations.

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Speaker 4: Which podcasts.

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Speaker 1: Katie asked a question about other than trillions, which other

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Speaker 1: which podcasts.

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Speaker 4: Do you listen to?

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Speaker 5: The list is too long.

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Speaker 1: To We're low on that list. So there's this tension

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Speaker 1: that I since between you and some other commissioners about approval,

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Speaker 1: and I'm just I'm curious what shortcomings has this process

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Speaker 1: revealed to you? Like you mentioned you've been a fan

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Speaker 1: of this idea for five years, So do you feel

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Speaker 1: like there should be a change to how the SEC

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Speaker 1: operates in this space.

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Speaker 3: I mean, look, the commission structure is one that I

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Speaker 3: really like, and I think it's good to have a

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Speaker 3: variety of perspectives, So that's not something I'm.

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Speaker 5: Trying to change. What I do think the SEC.

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Speaker 3: Needs to change is its attitude towards all things crypto

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Speaker 3: and blockchain. I mean, it really has gotten to be

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Speaker 3: to me a little bit ridiculous that we take a

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Speaker 3: position and that the moment something involves crypto or blockchain,

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Speaker 3: we start applying standards that are different. Is it fair

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Speaker 3: that we that we scrutinize things. Absolutely, I mean that's

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Speaker 3: our job, and I think we all know that there's

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Speaker 3: a lot of there are a lot of things that

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Speaker 3: have happened in the name of crypto and blockchain that

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Speaker 3: have been basically theft, and so there is certainly a

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Speaker 3: role for the SEC and in watching out on these

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Speaker 3: things and making sure that people are disclosing the risks

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Speaker 3: properly and so forth. But we do owe it to

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Speaker 3: people to apply the same standard to these products as

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Speaker 3: we do to others.

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Speaker 1: How persuasive are your ginger snap cookies and getting people

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Speaker 1: on the commission to change in their minds.

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Speaker 5: Well, I guess we'll see. I mean, I just made

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Speaker 5: them this week.

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Speaker 2: So wait, if we see approval, we can link that

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Speaker 2: cause and effect. Okay, you guys have any more Bitcoin questions?

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Speaker 1: Well, there's one more I did just want to ask,

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Speaker 1: which came from from you, which is it seems like

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Speaker 1: there's a lot of mystique within the SEC about how

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Speaker 1: these conversations go down and physically there's actually like.

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Speaker 4: Different floor tenth floor.

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Speaker 2: Yeah, yeah, you've heard this thing about I don't know,

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Speaker 2: is this something you guys say, like someone told me, Oh,

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Speaker 2: it's a tenth floor issue now, and what goes on

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Speaker 2: on the tenth floor.

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Speaker 5: Well, I'm on the tenth floor right now, I recording

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Speaker 5: trillions podcast.

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Speaker 3: But yeah, I mean the building is set up so

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Speaker 3: that the commissioners are on the tenth floor, and so

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Speaker 3: you do hear that tenth floor decisions. And you know,

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Speaker 3: I think the staff is always providing advice to us

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Speaker 3: and recommendations, but I do like to highlight that to

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Speaker 3: people that ultimately, at the end of the day, it's

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Speaker 3: the five of us that make the decisions, and so

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Speaker 3: you know you can do the math. You need to

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Speaker 3: get three of the five in order to get decisions made.

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Speaker 3: So I do have to be a better baker and

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Speaker 3: figure out what a few of my fellow commissioners what

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Speaker 3: kind of cookies they like.

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Speaker 6: All right, before we move on from the crypto conversation,

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Speaker 6: I do have one more question, and it kind of

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Speaker 6: goes back to what Joel was asking about when it

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Speaker 6: comes to the Pandora's box, and if we do get

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Speaker 6: spot bitcoin ETF approval, is it too simplistic to think

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Speaker 6: that spot ether will follow after that whatever other coin

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Speaker 6: is in vogue right now?

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Speaker 4: Or what are you thinking about that?

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Speaker 3: Again, if you're trying to read tea leaves, you should

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Speaker 3: talk to my colleagues because I have been an outlier

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Speaker 3: on many crypto related issues for a long time, and

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Speaker 3: so I don't think I'm the best one for you

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Speaker 3: to talk to you about those kinds of things.

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Speaker 2: Okay, we're done the bitcoin, so let's all take a

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Speaker 2: exhale now.

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Speaker 4: All right, let's move on. We have other good topics.

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Speaker 4: Don't worry.

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Speaker 2: I was lucky enough to speak at the Division of

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Speaker 2: Investment Management earlier this year, you had your first ever

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Speaker 2: investment conference, and one of the topics I went the

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Speaker 2: whole day and listened to other people's and this idea

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Speaker 2: of like black Rock and Van Guard and how they

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Speaker 2: vote and whether they're voting to ESG or not ESG.

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Speaker 4: Enough.

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Speaker 2: It came up a lot in this event, and I

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Speaker 2: think it was Dalia Blasts, who used to be the commissioner,

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Speaker 2: had said at one point, well, if they would just

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Speaker 2: let people vote their shares, this would sort of maybe

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Speaker 2: the marketplace would decide this because you know the size

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Speaker 2: of black Rock and Vanguard. If you look at any stock,

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Speaker 2: they're number one or number two. They own fifteen percent

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Speaker 2: of every company in America, and this is something most

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Speaker 2: people can like understand. Wait, we don't want them having

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Speaker 2: that much power. They now have proxy programs to allow

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Speaker 2: their investors to have some choice in the voting. Is

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Speaker 2: this an issue that the SEC is looking at. Does

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Speaker 2: the proxy voting programs kind of easier concerns or is

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Speaker 2: it just the nothing burger that is really more of

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Speaker 2: just the media.

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Speaker 3: Issue without talking about any particular asset manager. I think

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Speaker 3: it really is important to be pretty precise about how

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Speaker 3: we think about funds and asset managers. So the asset managers,

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Speaker 3: although they do many of the large asset managers have

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Speaker 3: a lot of money under management, they don't actually own anything.

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Speaker 5: The ownership is at the fund level, right.

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Speaker 3: The funds own the assets and then people own the funds.

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Speaker 3: So you have shareholders who own the funds. But the

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Speaker 3: fund is itself a separate entity with its own objectives,

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Speaker 3: and its shares ought to be voted or not voted

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Speaker 3: in accordance with those objectives. So if you're buying a

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Speaker 3: passive index fund, I would argue that you're not expecting

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Speaker 3: an activist voting and engagement strategy unless you're being told

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Speaker 3: specifically that that's what you're getting. So if an asset

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Speaker 3: manager wants to sell a fund that's a passive fund,

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Speaker 3: passive index fund, but involves an act development in engaging

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Speaker 3: with companies and voting and otherwise, then that's something that

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Speaker 3: should be very clear. So when we talk about passing

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Speaker 3: down a vote through to the shareholders of a fund,

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Speaker 3: the vote actually belongs to the fund, not to the shareholders,

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Speaker 3: and so I think that we have to be careful

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Speaker 3: about what those mechanisms look like too.

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Speaker 5: Again, an asset manager can do what it.

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Speaker 3: Wants as long as it tells that the people who

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Speaker 3: are buying the fund. If it says we're going to

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Speaker 3: vote the shares in proportion to how shareholders of the

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Speaker 3: fund say they want them voted, you know, as long

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Speaker 3: as people know ahead of time. But I think it

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Speaker 3: really is important to remember that the fund is its

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Speaker 3: own entity, with its own objectives, which might clash with

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Speaker 3: the objectives of the asset manager and with the objectives

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Speaker 3: of shareholders.

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Speaker 5: In that fund.

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Speaker 1: I'm curious as we approach sort of the end of

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Speaker 1: the year here has to we at Bloomberg News tend

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Speaker 1: to do a lot of stories that are pitched toward

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Speaker 1: the year ahead, and I'm just curious, like, what is

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Speaker 1: your sleeper priority as you look in to next year.

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Speaker 3: Well, the SEC has a very busy agenda, and the

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Speaker 3: chair sets the agenda. As chair, he gets that prerogative.

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Speaker 3: I personally would if I were setting the agenda, would

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Speaker 3: be working on some different things. I think Capital Formation

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Speaker 3: has not gotten enough attention. I think there's some bread

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Speaker 3: and butter, sort of boring kind of rules that need

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Speaker 3: some attention to. I'd love us to take on transfer

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Speaker 3: agent rulemaking as an example of that, so I think

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Speaker 3: there are areas we could be spending our time. I

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Speaker 3: think it's likely that we'll be spending our time on

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Speaker 3: the regulatory agenda that the Chair has set out.

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Speaker 6: Well, speaking of boring things that maybe very exciting to

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Speaker 6: the people in this room, I want to talk about

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Speaker 6: share classes specifically. Vanguard had that patent where it could

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Speaker 6: issue its ETFs as a share class of its mutual funds.

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Speaker 6: That patent has since expired, and you've seen the likes

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Speaker 6: of Dimensional. I think Fidelity as well has applied for

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Speaker 6: exemptive relief to also do that with its mutual funds.

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Speaker 6: Where does that fall on the priority list if at all?

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Speaker 3: Yeah, I mean I certainly wasn't surprised to see those

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Speaker 3: exemptive applications come in.

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Speaker 5: I think it is important to remember that there's a.

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Speaker 3: Process that they have to go through, and so that

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Speaker 3: process is actually run at the staff level. A lot

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Speaker 3: of the work is done at the staff level, and

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Speaker 3: so it's kind of running in parallel to our rulemaking.

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Speaker 3: But again, no sense of timing. I can't give you

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Speaker 3: a sense of timing on that.

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Speaker 6: Well, beyond timing, can you talk a little bit about

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Speaker 6: some of the potential issues here? The potential discussion points

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Speaker 6: because speaking it over with some of the issuers involved

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Speaker 6: and also people within the industry, it's been said that

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Speaker 6: one of the hang ups is it's unclear what benefits

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Speaker 6: this would actually mean for the ETF holders. Hoping you

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Speaker 6: can share some thinking around that.

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Speaker 3: Yeah, I mean, I think it's too early for me

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Speaker 3: to say what those discussions are ongoing now, So it's

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Speaker 3: too early for me to say sort of where the

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Speaker 3: issues will be. The staff is engaging with each of

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Speaker 3: the applicants on those kinds of issues. I mean, it's

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Speaker 3: a little you know this is it can be a

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Speaker 3: little frustrating sometimes the exemptive application process because there can

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Speaker 3: be one fun complex that has particular relief and other

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Speaker 3: fun complexes are lining up to get it, and that

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Speaker 3: process then allows us over time to come up with

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Speaker 3: conditions that we might use to craft a rule, which

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Speaker 3: is what happened when we came out with sixty eleven.

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Speaker 3: It took a lot of years, but we finally came

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Speaker 3: out with an ETF fool that had conditions. This wasn't

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Speaker 3: part of that, So that's why they all have to

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Speaker 3: go through the exemptive application process for discussion.

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Speaker 5: Application by application.

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Speaker 1: Hester I don't know if you're picking up on it,

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Speaker 1: but we don't do this live very often. So we're

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Speaker 1: trying to communicate with each other about who's next. And

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Speaker 1: I'm going to bring in like baseball signals soon so

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Speaker 1: that you know, we can get reads on each other

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Speaker 1: so that we know, sorry, no, it's okay. We're just

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Speaker 1: trying to figure it out as we go. Yeah, it's

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Speaker 1: the strong strong. But I think you said capital allocation

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Speaker 1: would be a sleeper priority verse could you could you

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Speaker 1: just talk through what that would look like if you

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Speaker 1: got to.

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Speaker 3: Capital formation, I say, location, I don't want us to

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Speaker 3: be doing capital allocation. I want us to be doing

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Speaker 3: rules that support capital formation.

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Speaker 1: Okay, so tell us more about that.

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Speaker 4: What if you if there were more rules.

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Speaker 1: To that effect, what would they look like?

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Speaker 3: So I think one area we need to think about

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Speaker 3: is small businesses. Do they have the tools that they

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Speaker 3: need to raise capital? Are there things that we could

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Speaker 3: do around finders? For example, could we do a microoferating

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Speaker 3: exemption that would be a really stripped down exemption. And

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Speaker 3: then thinking along the spectrum right as companies get bigger,

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Speaker 3: One question that a lot of people are asking is

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Speaker 3: why aren't more companies going public, and I think that's

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Speaker 3: a conversation we really need to be having. It is

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Speaker 3: concerning to me that so much of the growth is

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Speaker 3: happening in the private markets.

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Speaker 5: Now.

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Speaker 3: My answer to that is not to make the private

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Speaker 3: markets look like the public markets. It's to say, what

443
00:23:19,480 --> 00:23:21,840
Speaker 3: are we doing wrong on the public market side.

444
00:23:22,440 --> 00:23:24,520
Speaker 5: There are a lot of factors that work here, of course,

445
00:23:24,560 --> 00:23:26,040
Speaker 5: but I think we're doing some.

446
00:23:26,000 --> 00:23:29,600
Speaker 3: Things wrong on the public market side that make it

447
00:23:29,720 --> 00:23:31,879
Speaker 3: less attractive to be public than it should be.

448
00:23:32,080 --> 00:23:34,560
Speaker 5: And so I'd like us to spend some time working

449
00:23:34,600 --> 00:23:34,960
Speaker 5: on that.

450
00:23:35,720 --> 00:23:38,640
Speaker 2: And when it comes to the biggest users of ETFs

451
00:23:38,720 --> 00:23:42,760
Speaker 2: or advisors, they're about seventy percent ish of all the

452
00:23:42,800 --> 00:23:45,840
Speaker 2: ETF assets. When you look at that market, I think

453
00:23:46,000 --> 00:23:50,639
Speaker 2: like sixty percent are fiduciary fee based, maybe thirty percent

454
00:23:50,680 --> 00:23:53,280
Speaker 2: sty'll get a commission from the mutual fund. Is there

455
00:23:53,280 --> 00:23:56,399
Speaker 2: anything in that intermediary world that you guys look at

456
00:23:56,520 --> 00:23:59,400
Speaker 2: or that you think might need some regulation.

457
00:24:00,600 --> 00:24:03,639
Speaker 3: Well, I mean, we have reg best interest and then

458
00:24:03,680 --> 00:24:05,600
Speaker 3: we put out at the same time we put that out,

459
00:24:05,680 --> 00:24:09,480
Speaker 3: we put a fiduciary interpretation out. So I think we

460
00:24:09,600 --> 00:24:12,760
Speaker 3: have those out there. I think one thing I'm quite

461
00:24:12,800 --> 00:24:16,720
Speaker 3: concerned about is making sure that advice is available to

462
00:24:17,680 --> 00:24:20,399
Speaker 3: everyone at you know, even people who don't have a

463
00:24:20,400 --> 00:24:21,600
Speaker 3: lot of money to invest.

464
00:24:22,400 --> 00:24:24,120
Speaker 5: And that's a.

465
00:24:24,040 --> 00:24:27,199
Speaker 3: Trend that I've seen that troubles me somewhat, which is

466
00:24:27,200 --> 00:24:30,560
Speaker 3: that everyone wants to serve ultra high net worth investors,

467
00:24:31,119 --> 00:24:35,640
Speaker 3: and the investors with the least to invest, who may

468
00:24:35,720 --> 00:24:40,320
Speaker 3: most need not most, but certainly may may need assistance

469
00:24:40,359 --> 00:24:44,120
Speaker 3: and want assistance, can't find it because it's the regulatory

470
00:24:44,200 --> 00:24:46,600
Speaker 3: risks are too high and the rewards are too low.

471
00:24:46,680 --> 00:24:49,280
Speaker 3: So we need to make sure that our regulatory regime

472
00:24:49,400 --> 00:24:53,240
Speaker 3: is not standing in the way of offering services to

473
00:24:54,080 --> 00:24:57,560
Speaker 3: people all across the wealth spectrum. And I think part

474
00:24:57,600 --> 00:25:02,520
Speaker 3: of that, part of what I'm concerned about, is we

475
00:25:02,600 --> 00:25:06,720
Speaker 3: need to not stand in the way of financial professionals

476
00:25:06,800 --> 00:25:13,000
Speaker 3: using technology to make their advice cheaper to provide. And

477
00:25:13,040 --> 00:25:16,520
Speaker 3: that's a direction I'm not sure this commission is heading in.

478
00:25:16,560 --> 00:25:19,280
Speaker 3: I think we're actually we're actually going the other way

479
00:25:19,320 --> 00:25:21,400
Speaker 3: and making it harder to use technology.

480
00:25:22,040 --> 00:25:25,600
Speaker 2: Okay, on that front, when it comes to technology, I

481
00:25:25,680 --> 00:25:29,680
Speaker 2: feel as though the issuers, the et officiers can't say

482
00:25:29,840 --> 00:25:33,880
Speaker 2: anything and people will Index providers seem to be able

483
00:25:33,920 --> 00:25:36,320
Speaker 2: to say anything they want. Advisors have a lot of

484
00:25:36,320 --> 00:25:38,040
Speaker 2: freedom too, but when it comes to like their ticker,

485
00:25:38,040 --> 00:25:41,639
Speaker 2: they can't even defend themselves. Is there any plans to

486
00:25:41,720 --> 00:25:44,560
Speaker 2: loosen that up? Given that social media and the Internet

487
00:25:44,560 --> 00:25:48,320
Speaker 2: has really opened up the floodgates and letting etffiiciers, you know,

488
00:25:48,400 --> 00:25:51,120
Speaker 2: sort of have a little more freedom to talk about

489
00:25:51,160 --> 00:25:54,640
Speaker 2: their funds, defend their products, you know, give more information.

490
00:25:56,040 --> 00:25:56,200
Speaker 5: Yeah.

491
00:25:56,240 --> 00:25:59,200
Speaker 3: I mean, that's an interesting suggestion, and it's one I'd

492
00:25:59,200 --> 00:26:00,879
Speaker 3: love to talk to you little bit more about. I

493
00:26:00,920 --> 00:26:06,600
Speaker 3: think that, I know, the whole nature of communications has

494
00:26:06,720 --> 00:26:08,919
Speaker 3: changed a lot since a lot of our rules were written,

495
00:26:08,920 --> 00:26:11,200
Speaker 3: and I think it does make sense to think about.

496
00:26:11,359 --> 00:26:14,000
Speaker 5: Whether we need to refresh some of those rules.

497
00:26:14,440 --> 00:26:17,840
Speaker 6: I just wanted to talk about complex products. If we

498
00:26:18,000 --> 00:26:20,680
Speaker 6: rewind about two years ago, I think it was October

499
00:26:20,720 --> 00:26:24,040
Speaker 6: twenty twenty one, Gary Gensler came out and said that

500
00:26:24,080 --> 00:26:28,280
Speaker 6: the SEC was looking into new rules for coimplex products.

501
00:26:29,040 --> 00:26:32,560
Speaker 6: There's still question marks about what exactly is a complex product.

502
00:26:32,560 --> 00:26:35,480
Speaker 6: But basically since then, I feel like we haven't heard.

503
00:26:35,280 --> 00:26:36,720
Speaker 4: About complex products or.

504
00:26:36,720 --> 00:26:41,080
Speaker 6: Any potential tightened rules since then. What is the status

505
00:26:41,119 --> 00:26:42,080
Speaker 6: the thinking around that?

506
00:26:44,119 --> 00:26:46,959
Speaker 3: Well, again, I can't speak for other commissioners, but what

507
00:26:47,040 --> 00:26:50,399
Speaker 3: I can say is that we should be thinking about

508
00:26:50,480 --> 00:26:55,080
Speaker 3: again allowing people to use technology to better communicate with investors,

509
00:26:55,119 --> 00:26:57,800
Speaker 3: and to communicate in a way that they not only

510
00:26:57,840 --> 00:27:00,439
Speaker 3: absorb the information, but they really think about it, that

511
00:27:00,520 --> 00:27:02,880
Speaker 3: it prompts them to ask the right kinds of questions

512
00:27:02,960 --> 00:27:03,760
Speaker 3: and things like that.

513
00:27:04,320 --> 00:27:06,240
Speaker 5: But what I don't want us to do, and what

514
00:27:06,320 --> 00:27:07,000
Speaker 5: I don't think.

515
00:27:06,880 --> 00:27:09,240
Speaker 3: We have the authority to do, is to try to

516
00:27:09,320 --> 00:27:13,159
Speaker 3: override people's decisions. Right, people have the right to invest

517
00:27:13,160 --> 00:27:15,520
Speaker 3: their money the way they want. And so when I

518
00:27:15,560 --> 00:27:19,520
Speaker 3: look at these discussions around complex products, it often looks

519
00:27:19,560 --> 00:27:22,879
Speaker 3: to me as if people are saying they want to

520
00:27:22,920 --> 00:27:25,359
Speaker 3: engage in merit regulation, they want to start picking and

521
00:27:25,440 --> 00:27:29,720
Speaker 3: choosing what investments are right for people. And that's just

522
00:27:29,840 --> 00:27:33,119
Speaker 3: not a role that we at the SEC are well

523
00:27:33,520 --> 00:27:37,720
Speaker 3: situated to play. And I think it would be quite

524
00:27:37,760 --> 00:27:41,280
Speaker 3: a departure from our role, which traditionally has been, Look,

525
00:27:41,320 --> 00:27:44,440
Speaker 3: you provide the disclosure, and you let investors and their

526
00:27:44,480 --> 00:27:48,920
Speaker 3: financial professionals make decisions about what's best for a particular investor.

527
00:27:50,600 --> 00:27:53,800
Speaker 1: Next year, sensing a theme here, I've thought next year

528
00:27:54,359 --> 00:27:59,080
Speaker 1: election here in the US there's a chance new administration,

529
00:28:00,320 --> 00:28:04,440
Speaker 1: there's a chance that you might be the next SEC commissioner.

530
00:28:04,520 --> 00:28:07,679
Speaker 1: If your chair, what would we expect from you?

531
00:28:09,400 --> 00:28:11,679
Speaker 3: Look, I think that we need to work with the

532
00:28:11,760 --> 00:28:15,000
Speaker 3: situation we're in now, and my goal at this point

533
00:28:15,119 --> 00:28:17,359
Speaker 3: is to try to convince my colleagues that we ought

534
00:28:17,359 --> 00:28:21,119
Speaker 3: to pivot from some of the agenda we're on and

535
00:28:21,200 --> 00:28:23,240
Speaker 3: try to try to work on a more what I

536
00:28:23,240 --> 00:28:26,760
Speaker 3: would describe as a more productive agenda that again focuses

537
00:28:26,800 --> 00:28:29,560
Speaker 3: on capital formation. I would like, I mean, and not

538
00:28:29,640 --> 00:28:31,320
Speaker 3: to bring up the topic that I know we said

539
00:28:31,440 --> 00:28:33,880
Speaker 3: was closed out. I would like us also to think

540
00:28:33,880 --> 00:28:37,360
Speaker 3: about how we could approach crypto regulation in a way

541
00:28:37,359 --> 00:28:41,040
Speaker 3: that made sense. So that's another item that I think

542
00:28:41,080 --> 00:28:41,640
Speaker 3: should be on.

543
00:28:41,880 --> 00:28:43,720
Speaker 1: Okay, Well, I'm so glad you did that because you

544
00:28:43,800 --> 00:28:45,200
Speaker 1: let me come back to it now. And like in

545
00:28:45,280 --> 00:28:47,280
Speaker 1: good stories, you take the beginning and you go back

546
00:28:47,440 --> 00:28:49,000
Speaker 1: to it at the end. So here I am at

547
00:28:49,000 --> 00:28:49,280
Speaker 1: the end.

548
00:28:49,520 --> 00:28:50,640
Speaker 4: What do we not ask you.

549
00:28:50,680 --> 00:28:52,720
Speaker 1: About a bitcoin at ETF that we should have asked

550
00:28:52,720 --> 00:28:53,080
Speaker 1: you about?

551
00:28:54,320 --> 00:28:54,480
Speaker 5: Oh?

552
00:28:54,520 --> 00:28:57,680
Speaker 3: I think you asked me and every one when everyone

553
00:28:57,800 --> 00:28:59,520
Speaker 3: is going to be approved, and I can't tell you

554
00:28:59,600 --> 00:29:00,160
Speaker 3: that there.

555
00:29:00,120 --> 00:29:03,000
Speaker 6: Is nothing else to ask Okay, actually I have one

556
00:29:03,000 --> 00:29:05,600
Speaker 6: more question on crypto ETFs.

557
00:29:06,120 --> 00:29:07,720
Speaker 4: Sorry to bring us back there again, but.

558
00:29:07,720 --> 00:29:10,160
Speaker 6: It's been interesting, you know, seeing the memos coming out

559
00:29:10,200 --> 00:29:13,880
Speaker 6: from the meetings that the issuers are having with the

560
00:29:14,040 --> 00:29:14,920
Speaker 6: SEC and Eric.

561
00:29:14,960 --> 00:29:16,280
Speaker 4: This is a point that you've raised.

562
00:29:16,480 --> 00:29:20,080
Speaker 6: It's interesting that market makers haven't been in those meetings.

563
00:29:20,120 --> 00:29:21,880
Speaker 4: Why haven't they?

564
00:29:22,840 --> 00:29:23,960
Speaker 5: I can't answer that question.

565
00:29:24,040 --> 00:29:26,440
Speaker 3: I don't know why why they haven't been in meetings,

566
00:29:26,480 --> 00:29:28,760
Speaker 3: and maybe they have been, but I just can't answer

567
00:29:28,840 --> 00:29:29,320
Speaker 3: that question.

568
00:29:29,520 --> 00:29:31,560
Speaker 1: Well, when when they're ready to be in the meetings,

569
00:29:31,600 --> 00:29:35,040
Speaker 1: we know that there's ginger snaps. That's true, Hester Verse,

570
00:29:35,080 --> 00:29:37,959
Speaker 1: thank you so much for joining us at ETF's in

571
00:29:38,000 --> 00:29:41,800
Speaker 1: Depth and as well on the on our ETF Trillions podcast.

572
00:29:42,160 --> 00:29:43,120
Speaker 5: Thanks for having me.

573
00:29:43,480 --> 00:29:44,400
Speaker 1: Thank you, sure.

574
00:29:49,760 --> 00:29:52,920
Speaker 2: Ah, you made it Hester, not you. You don't get

575
00:29:52,920 --> 00:29:55,240
Speaker 2: the cocktails, but it looks like they have cocktails in

576
00:29:55,240 --> 00:29:55,760
Speaker 2: the ten source.

577
00:29:55,840 --> 00:29:56,200
Speaker 4: You're good.

578
00:29:56,600 --> 00:29:59,480
Speaker 2: I'm sure they probably need them up there. You guys

579
00:30:00,160 --> 00:30:02,920
Speaker 2: enjoy us join us for some cocktails in their networking

580
00:30:02,960 --> 00:30:04,800
Speaker 2: for the next hour, and thank you for attending and

581
00:30:04,840 --> 00:30:05,600
Speaker 2: making it the whole time.

582
00:30:05,840 --> 00:30:15,320
Speaker 1: Thank you, thank you, thanks for listening to trillions. Until

583
00:30:15,320 --> 00:30:17,479
Speaker 1: next time you can find us on the Bloomberg Terminal,

584
00:30:17,840 --> 00:30:22,520
Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you'd

585
00:30:22,520 --> 00:30:25,120
Speaker 1: like to listen. We'd love to hear from you. We're

586
00:30:25,200 --> 00:30:29,560
Speaker 1: on Twitter, I'm at Joel Webber Show. He's at Eric Balchunis.

587
00:30:30,720 --> 00:30:33,480
Speaker 1: This episode of Trillions was produced by Magnus and Rickson

588
00:30:34,360 --> 00:30:35,920
Speaker 1: Bye