Speaker 1: Booking Trains. I'm Joel Webber and.
Speaker 2: I'm Eric palchunas Eric.
Speaker 1: Last week we got to do a really great interview
Speaker 1: at the Bloomberg Intelligence ETF In Depth event where we
Speaker 1: brought back one of our pandemic interviews, like very early
Speaker 1: in the pandemic and talked to an SEC commissioner named
Speaker 1: Hester Purse.
Speaker 3: Yeah.
Speaker 2: No, she's been a guest on Trillions before a couple
Speaker 2: of years ago.
Speaker 1: During the pandemic. We were in our closets.
Speaker 2: Yes, and she's great. She's very open, you know, very
Speaker 2: open for a SC commissioner, and I thought it was
Speaker 2: a good way to end our event, which by the way,
Speaker 2: the Index team and the BSKT team also kind of
Speaker 2: sponsored the event. But it was a great event, full house.
Speaker 2: We had two hundred fifty people there. It's the eighth
Speaker 2: time we've done that event. And Trillions live recording closed
Speaker 2: the event. So when you when you hear what you're
Speaker 2: about to hear, just know this is in front of
Speaker 2: a live audience, which you can tell. I think you you.
Speaker 2: She kind of cracked people up a couple of times.
Speaker 1: She's funny, she's got a good funny h and she
Speaker 1: joined remote from Washington, d C. And we're also joined
Speaker 1: by Katie Gryfeld ETF reporter with Bloomberg News, this time
Speaker 1: on Trillions Live with Hester purs.
Speaker 2: All right, the grand Finale, hopefully we deliver. Uh So,
Speaker 2: this is a special situation here. We are going to
Speaker 2: record a live episode of Trillions. So let me bring
Speaker 2: up my co host, Joe Weber of Trillions and Katie Greyfeld,
Speaker 2: who I co host ETFIQ with, but she's on Trillions
Speaker 2: all the time. Anyway, let's bring them up and we
Speaker 2: have a great interview plan for you. And this is live,
Speaker 2: so let's keep the heckling limited, especially that guy over there.
Speaker 1: Why don't you go here? And then we'll put her
Speaker 1: over there. Well, we only do this on special occasions
Speaker 1: where we do a live episode of Trillions. Usually for
Speaker 1: the six years that Eric and I have been doing this,
Speaker 1: we've been in studios for a lot of the time.
Speaker 1: We've been in our closet or I guess my closet.
Speaker 1: I've been in my closet.
Speaker 2: You been in my closet. But he looks like the
Speaker 2: Blair Witch Project movie, where is like it just is
Speaker 2: really it's creepy.
Speaker 1: Because that was the pandemic obviously, and we were recording
Speaker 1: from home. That's not normal. We're back in the studio
Speaker 1: mostly Katie Greifeld's often with us. It's cool that Hester
Speaker 1: Purse is here today, though, because that was an episode
Speaker 1: very very early in the pandemic when we weren't quite
Speaker 1: sure what was going on in the world. And the
Speaker 1: world's changed and we're sort of back to normal now
Speaker 1: and we're going to talk to her about all things SEC.
Speaker 1: So let's let's bring her out SEC. Commissioner Hester Purse.
Speaker 4: There you go, Hi.
Speaker 2: I think she can see only us, but yeah, there's
Speaker 2: a big crowd here, so there you go.
Speaker 5: High Hester, I can see only you, but I'm sure
Speaker 5: I'll be able to hear.
Speaker 1: The Okay, So, Hester, The question that I asked you
Speaker 1: at the beginning of our interview with you last time
Speaker 1: was are you baking banana bread or sour dough? Because
Speaker 1: it was that point in the pandemic we were talking
Speaker 1: like late May one, and you replied that banana bread
Speaker 1: with chocolate chips is the only way to bake banana bread.
Speaker 1: So I'm curious, what are you baking now?
Speaker 5: This week? It was ginger snaps.
Speaker 1: Wow, there you go. What's next week going to be?
Speaker 5: Next week?
Speaker 3: Because I'm going to be trying to put off doing work.
Speaker 3: There will be bread, cookies, you name it.
Speaker 1: Okay, that's great, all right.
Speaker 5: It's my procrastinations. Cool.
Speaker 2: I thought you guys were staying late to approve all
Speaker 2: the spot bit hoityt filings.
Speaker 5: Yeah. Nice, nice try there.
Speaker 1: Okay, So let's just keep it going on bitcoin because
Speaker 1: we have to ask who's going to be the first
Speaker 1: ETF to get approved?
Speaker 5: All right, So.
Speaker 3: Before I get in to get tricked into answering any questions,
Speaker 3: I'm going to tell you that my views are my
Speaker 3: own views as a commissioner, not necessarily those of the
Speaker 3: SEC or my fellow commissioners.
Speaker 5: And as you might guess, I'm not going to answer
Speaker 5: that question.
Speaker 2: Okay, Okay, I'll try. We're all going to make make
Speaker 2: attempts here. I want to go over this. It's been
Speaker 2: ten years since the Winklevoss followed the ETF. You put
Speaker 2: out rebuttals over the years that you thought this should happen.
Speaker 2: I totally agreed with you. We're now at a point
Speaker 2: where it looks like, because of the Greyscale ruling, that
Speaker 2: something's happening. We've seen filings come back amended. We've seen
Speaker 2: meetings where they publicly show that, oh, black Rock and
Speaker 2: other issuers met with the Trading Commission's division. It just
Speaker 2: seems like all signs are kind of pointing that direction.
Speaker 2: Would you agree or is there something else we should
Speaker 2: look for? Do you think this kind of engagement is
Speaker 2: good for people who are looking to are hoping that
Speaker 2: these do hit the market at some point?
Speaker 3: I really am the wrong person to ask, because, as
Speaker 3: you noted, I thought that we should have approved one
Speaker 3: of these things over five years ago. So the fact
Speaker 3: that we haven't done it yet is a mystery to me.
Speaker 3: And trying to read the tea leaves is probably just
Speaker 3: as hard for me. We're almost as hard for me
Speaker 3: as it is for all of you.
Speaker 6: And I guess as we watch this evolve, and really
Speaker 6: we've really been on Bitcoin ETF watch, as Eric said,
Speaker 6: for the past decade, but especially for the past six
Speaker 6: months after that Blackrock refiling. Would you say at this
Speaker 6: point that the ETF ecosystem is ready, and more importantly,
Speaker 6: is the crypto ecosystem ready to handle this?
Speaker 3: I mean, I thought it was ready five years ago,
Speaker 3: so I don't think I think if anything that the
Speaker 3: system is more ready. We have experienced with foreign jurisdictions
Speaker 3: having tried similar things. We have experienced with products that
Speaker 3: are not spot products but futures products. So yes, I
Speaker 3: mean we're I think we have a lot of the
Speaker 3: things in place that need to be in place, even
Speaker 3: more than they were five years ago.
Speaker 2: And when we talk about this Bitcoin ETF, part of
Speaker 2: it is the ETF vehicle. And I guess is was
Speaker 2: your confidence back then partially rooted in the fact that
Speaker 2: the ETF vehicle is robust and had a track record
Speaker 2: of being able to put all kinds of stuff in
Speaker 2: it and simply, you know, use the power of arbitrage
Speaker 2: to keep the price close to the nave And did
Speaker 2: that track record factor into that?
Speaker 3: Yeah, I mean, I think that's absolutely right. ETFs have
Speaker 3: shown themselves to be a really helpful part of the
Speaker 3: market and a helpful way of bringing prices. You know,
Speaker 3: as you said, it's an arbitrage mechanism allows people a
Speaker 3: way to express their views about the value of things,
Speaker 3: and I think that could be very useful in this market.
Speaker 3: I should say that the facts and circumstances, of course,
Speaker 3: will matter any any application for anything. We're considering we're
Speaker 3: always going to be looking at the specific facts and circumstances,
Speaker 3: but you know, in general, this is we're very familiar
Speaker 3: with exchange traded products. We're now very familiar with the
Speaker 3: underlying bitcoin.
Speaker 5: So it seems to me that.
Speaker 3: The reasons that I thought five years ago are still
Speaker 3: there today. But again, talk to my colleagues, because I've
Speaker 3: been an outlier.
Speaker 1: Okay, so to get comfortable with that underlying bitcoin. How
Speaker 1: much bitcoin did the SEC have to acquire?
Speaker 3: Yeah, I think that you might want to talk to
Speaker 3: other parts of the government that have acquired bitcoin through
Speaker 3: through court actions.
Speaker 1: Through those It's true that I get the US government
Speaker 1: has acquired a bit of a bitcoin through some other means.
Speaker 1: I'm curious though about this Pandora's box effects that this
Speaker 1: opens up. Were you worried about that before five years ago?
Speaker 1: As you mentioned, Is that still a concern among your
Speaker 1: other commissioners? This what kind of response the fact that
Speaker 1: you know, you open something up, you authorize approval for it,
Speaker 1: but then we're going to have a whole other world
Speaker 1: of crypto knocking on your door.
Speaker 3: Look, you know, people can build products, Whether people will
Speaker 3: come and buy them is another question, And I trust
Speaker 3: that people who build products and spend a lot of
Speaker 3: money doing it are going to think about whether there's
Speaker 3: a market for what they're building.
Speaker 5: That's really not our it's not our job. Our job
Speaker 5: is to.
Speaker 3: Look at the rules and to look to see whether
Speaker 3: the products satisfy those rules. When I looked at at
Speaker 3: the prior exchange traded product that we consider bitcoin exchange
Speaker 3: traded products, I said, well, it looks to me very
Speaker 3: similar to some of these other products we've approved, so
Speaker 3: why not approve it.
Speaker 5: That doesn't mean that people.
Speaker 3: Will necessarily come and buy it, and so I think
Speaker 3: I don't really worry about that because I think people.
Speaker 5: Have market incentives to decide which products to bring.
Speaker 4: To market and hester in this process.
Speaker 6: It's been pretty amazing to just watch how much hype
Speaker 6: there has been over even routine paperwork refilings, et cetera.
Speaker 6: You will see the price of bitcoin pop occasionally when
Speaker 6: someone refiles something, and it seems like what's really in
Speaker 6: the zeitgeist right now is there's been a lot of
Speaker 6: chatter about whether the SEC is going to give its
Speaker 6: blessing to in kind redemptions or whether they're going to
Speaker 6: require cash redemptions for spot bitcoin ETFs, the sort of
Speaker 6: conversation there being that the SEC wouldn't want broker dealers
Speaker 6: to actually be handling bitcoin itself, and for that reason
Speaker 6: maybe that they would FA for cash.
Speaker 4: Can you bring us into any of that thinking, No.
Speaker 3: I mean again, I really can't say where the conversations are.
Speaker 3: I think people have been discussing memos that they've seen in.
Speaker 5: The file and what the filings look like.
Speaker 3: And that's normal as people are waiting to figure out
Speaker 3: whether or not the approvals will happen, but what they'll
Speaker 3: ultimately look like. I can't speculate on that. I can't
Speaker 3: speculate on whether it'll be cash or in time.
Speaker 2: And I was curious, as Katie mentioned, like someone updates
Speaker 2: in nineteen before these filings have very wonky names, and
Speaker 2: the thing blows up on Twitter, everybody is like getting excited,
Speaker 2: actually moves the price. Again, we're talking about these filings
Speaker 2: and the process. Do you guys see all this going
Speaker 2: on or you kind of shielded from it? And is
Speaker 2: it I mean, what is it unusual? I mean, I
Speaker 2: think it's unusual that just these really I gotta be honest,
Speaker 2: I really never cared that much about s ones I mean,
Speaker 2: until the ETF was sent to us and we added
Speaker 2: the DS page, I didn't really care. But over ten years,
Speaker 2: these little tiny changes in filings are being like comb
Speaker 2: through and it's become such an almost like pastime for
Speaker 2: the past year. Yeah, do you guys watch this?
Speaker 1: Do you see it?
Speaker 4: Are you like? What do you think of it?
Speaker 5: Well, I mean I've certainly seen that.
Speaker 3: I've listened to a lot of crypto podcasts, and I'm
Speaker 3: on Twitter, so I do, of course their X so
Speaker 3: I do, of course.
Speaker 5: See see that.
Speaker 3: I think, you know, it reminds me of how unfortunate
Speaker 3: it is that regulation ends up driving so much of
Speaker 3: what happens, and speculation about regulation ends up.
Speaker 5: Driving what happens.
Speaker 3: I really do long for the day when crypto podcasts
Speaker 3: don't spend forty percent of their time talking about regulations.
Speaker 4: Which podcasts.
Speaker 1: Katie asked a question about other than trillions, which other
Speaker 1: which podcasts.
Speaker 4: Do you listen to?
Speaker 5: The list is too long.
Speaker 1: To We're low on that list. So there's this tension
Speaker 1: that I since between you and some other commissioners about approval,
Speaker 1: and I'm just I'm curious what shortcomings has this process
Speaker 1: revealed to you? Like you mentioned you've been a fan
Speaker 1: of this idea for five years, So do you feel
Speaker 1: like there should be a change to how the SEC
Speaker 1: operates in this space.
Speaker 3: I mean, look, the commission structure is one that I
Speaker 3: really like, and I think it's good to have a
Speaker 3: variety of perspectives, So that's not something I'm.
Speaker 5: Trying to change. What I do think the SEC.
Speaker 3: Needs to change is its attitude towards all things crypto
Speaker 3: and blockchain. I mean, it really has gotten to be
Speaker 3: to me a little bit ridiculous that we take a
Speaker 3: position and that the moment something involves crypto or blockchain,
Speaker 3: we start applying standards that are different. Is it fair
Speaker 3: that we that we scrutinize things. Absolutely, I mean that's
Speaker 3: our job, and I think we all know that there's
Speaker 3: a lot of there are a lot of things that
Speaker 3: have happened in the name of crypto and blockchain that
Speaker 3: have been basically theft, and so there is certainly a
Speaker 3: role for the SEC and in watching out on these
Speaker 3: things and making sure that people are disclosing the risks
Speaker 3: properly and so forth. But we do owe it to
Speaker 3: people to apply the same standard to these products as
Speaker 3: we do to others.
Speaker 1: How persuasive are your ginger snap cookies and getting people
Speaker 1: on the commission to change in their minds.
Speaker 5: Well, I guess we'll see. I mean, I just made
Speaker 5: them this week.
Speaker 2: So wait, if we see approval, we can link that
Speaker 2: cause and effect. Okay, you guys have any more Bitcoin questions?
Speaker 1: Well, there's one more I did just want to ask,
Speaker 1: which came from from you, which is it seems like
Speaker 1: there's a lot of mystique within the SEC about how
Speaker 1: these conversations go down and physically there's actually like.
Speaker 4: Different floor tenth floor.
Speaker 2: Yeah, yeah, you've heard this thing about I don't know,
Speaker 2: is this something you guys say, like someone told me, Oh,
Speaker 2: it's a tenth floor issue now, and what goes on
Speaker 2: on the tenth floor.
Speaker 5: Well, I'm on the tenth floor right now, I recording
Speaker 5: trillions podcast.
Speaker 3: But yeah, I mean the building is set up so
Speaker 3: that the commissioners are on the tenth floor, and so
Speaker 3: you do hear that tenth floor decisions. And you know,
Speaker 3: I think the staff is always providing advice to us
Speaker 3: and recommendations, but I do like to highlight that to
Speaker 3: people that ultimately, at the end of the day, it's
Speaker 3: the five of us that make the decisions, and so
Speaker 3: you know you can do the math. You need to
Speaker 3: get three of the five in order to get decisions made.
Speaker 3: So I do have to be a better baker and
Speaker 3: figure out what a few of my fellow commissioners what
Speaker 3: kind of cookies they like.
Speaker 6: All right, before we move on from the crypto conversation,
Speaker 6: I do have one more question, and it kind of
Speaker 6: goes back to what Joel was asking about when it
Speaker 6: comes to the Pandora's box, and if we do get
Speaker 6: spot bitcoin ETF approval, is it too simplistic to think
Speaker 6: that spot ether will follow after that whatever other coin
Speaker 6: is in vogue right now?
Speaker 4: Or what are you thinking about that?
Speaker 3: Again, if you're trying to read tea leaves, you should
Speaker 3: talk to my colleagues because I have been an outlier
Speaker 3: on many crypto related issues for a long time, and
Speaker 3: so I don't think I'm the best one for you
Speaker 3: to talk to you about those kinds of things.
Speaker 2: Okay, we're done the bitcoin, so let's all take a
Speaker 2: exhale now.
Speaker 4: All right, let's move on. We have other good topics.
Speaker 4: Don't worry.
Speaker 2: I was lucky enough to speak at the Division of
Speaker 2: Investment Management earlier this year, you had your first ever
Speaker 2: investment conference, and one of the topics I went the
Speaker 2: whole day and listened to other people's and this idea
Speaker 2: of like black Rock and Van Guard and how they
Speaker 2: vote and whether they're voting to ESG or not ESG.
Speaker 4: Enough.
Speaker 2: It came up a lot in this event, and I
Speaker 2: think it was Dalia Blasts, who used to be the commissioner,
Speaker 2: had said at one point, well, if they would just
Speaker 2: let people vote their shares, this would sort of maybe
Speaker 2: the marketplace would decide this because you know the size
Speaker 2: of black Rock and Vanguard. If you look at any stock,
Speaker 2: they're number one or number two. They own fifteen percent
Speaker 2: of every company in America, and this is something most
Speaker 2: people can like understand. Wait, we don't want them having
Speaker 2: that much power. They now have proxy programs to allow
Speaker 2: their investors to have some choice in the voting. Is
Speaker 2: this an issue that the SEC is looking at. Does
Speaker 2: the proxy voting programs kind of easier concerns or is
Speaker 2: it just the nothing burger that is really more of
Speaker 2: just the media.
Speaker 3: Issue without talking about any particular asset manager. I think
Speaker 3: it really is important to be pretty precise about how
Speaker 3: we think about funds and asset managers. So the asset managers,
Speaker 3: although they do many of the large asset managers have
Speaker 3: a lot of money under management, they don't actually own anything.
Speaker 5: The ownership is at the fund level, right.
Speaker 3: The funds own the assets and then people own the funds.
Speaker 3: So you have shareholders who own the funds. But the
Speaker 3: fund is itself a separate entity with its own objectives,
Speaker 3: and its shares ought to be voted or not voted
Speaker 3: in accordance with those objectives. So if you're buying a
Speaker 3: passive index fund, I would argue that you're not expecting
Speaker 3: an activist voting and engagement strategy unless you're being told
Speaker 3: specifically that that's what you're getting. So if an asset
Speaker 3: manager wants to sell a fund that's a passive fund,
Speaker 3: passive index fund, but involves an act development in engaging
Speaker 3: with companies and voting and otherwise, then that's something that
Speaker 3: should be very clear. So when we talk about passing
Speaker 3: down a vote through to the shareholders of a fund,
Speaker 3: the vote actually belongs to the fund, not to the shareholders,
Speaker 3: and so I think that we have to be careful
Speaker 3: about what those mechanisms look like too.
Speaker 5: Again, an asset manager can do what it.
Speaker 3: Wants as long as it tells that the people who
Speaker 3: are buying the fund. If it says we're going to
Speaker 3: vote the shares in proportion to how shareholders of the
Speaker 3: fund say they want them voted, you know, as long
Speaker 3: as people know ahead of time. But I think it
Speaker 3: really is important to remember that the fund is its
Speaker 3: own entity, with its own objectives, which might clash with
Speaker 3: the objectives of the asset manager and with the objectives
Speaker 3: of shareholders.
Speaker 5: In that fund.
Speaker 1: I'm curious as we approach sort of the end of
Speaker 1: the year here has to we at Bloomberg News tend
Speaker 1: to do a lot of stories that are pitched toward
Speaker 1: the year ahead, and I'm just curious, like, what is
Speaker 1: your sleeper priority as you look in to next year.
Speaker 3: Well, the SEC has a very busy agenda, and the
Speaker 3: chair sets the agenda. As chair, he gets that prerogative.
Speaker 3: I personally would if I were setting the agenda, would
Speaker 3: be working on some different things. I think Capital Formation
Speaker 3: has not gotten enough attention. I think there's some bread
Speaker 3: and butter, sort of boring kind of rules that need
Speaker 3: some attention to. I'd love us to take on transfer
Speaker 3: agent rulemaking as an example of that, so I think
Speaker 3: there are areas we could be spending our time. I
Speaker 3: think it's likely that we'll be spending our time on
Speaker 3: the regulatory agenda that the Chair has set out.
Speaker 6: Well, speaking of boring things that maybe very exciting to
Speaker 6: the people in this room, I want to talk about
Speaker 6: share classes specifically. Vanguard had that patent where it could
Speaker 6: issue its ETFs as a share class of its mutual funds.
Speaker 6: That patent has since expired, and you've seen the likes
Speaker 6: of Dimensional. I think Fidelity as well has applied for
Speaker 6: exemptive relief to also do that with its mutual funds.
Speaker 6: Where does that fall on the priority list if at all?
Speaker 3: Yeah, I mean I certainly wasn't surprised to see those
Speaker 3: exemptive applications come in.
Speaker 5: I think it is important to remember that there's a.
Speaker 3: Process that they have to go through, and so that
Speaker 3: process is actually run at the staff level. A lot
Speaker 3: of the work is done at the staff level, and
Speaker 3: so it's kind of running in parallel to our rulemaking.
Speaker 3: But again, no sense of timing. I can't give you
Speaker 3: a sense of timing on that.
Speaker 6: Well, beyond timing, can you talk a little bit about
Speaker 6: some of the potential issues here? The potential discussion points
Speaker 6: because speaking it over with some of the issuers involved
Speaker 6: and also people within the industry, it's been said that
Speaker 6: one of the hang ups is it's unclear what benefits
Speaker 6: this would actually mean for the ETF holders. Hoping you
Speaker 6: can share some thinking around that.
Speaker 3: Yeah, I mean, I think it's too early for me
Speaker 3: to say what those discussions are ongoing now, So it's
Speaker 3: too early for me to say sort of where the
Speaker 3: issues will be. The staff is engaging with each of
Speaker 3: the applicants on those kinds of issues. I mean, it's
Speaker 3: a little you know this is it can be a
Speaker 3: little frustrating sometimes the exemptive application process because there can
Speaker 3: be one fun complex that has particular relief and other
Speaker 3: fun complexes are lining up to get it, and that
Speaker 3: process then allows us over time to come up with
Speaker 3: conditions that we might use to craft a rule, which
Speaker 3: is what happened when we came out with sixty eleven.
Speaker 3: It took a lot of years, but we finally came
Speaker 3: out with an ETF fool that had conditions. This wasn't
Speaker 3: part of that, So that's why they all have to
Speaker 3: go through the exemptive application process for discussion.
Speaker 5: Application by application.
Speaker 1: Hester I don't know if you're picking up on it,
Speaker 1: but we don't do this live very often. So we're
Speaker 1: trying to communicate with each other about who's next. And
Speaker 1: I'm going to bring in like baseball signals soon so
Speaker 1: that you know, we can get reads on each other
Speaker 1: so that we know, sorry, no, it's okay. We're just
Speaker 1: trying to figure it out as we go. Yeah, it's
Speaker 1: the strong strong. But I think you said capital allocation
Speaker 1: would be a sleeper priority verse could you could you
Speaker 1: just talk through what that would look like if you
Speaker 1: got to.
Speaker 3: Capital formation, I say, location, I don't want us to
Speaker 3: be doing capital allocation. I want us to be doing
Speaker 3: rules that support capital formation.
Speaker 1: Okay, so tell us more about that.
Speaker 4: What if you if there were more rules.
Speaker 1: To that effect, what would they look like?
Speaker 3: So I think one area we need to think about
Speaker 3: is small businesses. Do they have the tools that they
Speaker 3: need to raise capital? Are there things that we could
Speaker 3: do around finders? For example, could we do a microoferating
Speaker 3: exemption that would be a really stripped down exemption. And
Speaker 3: then thinking along the spectrum right as companies get bigger,
Speaker 3: One question that a lot of people are asking is
Speaker 3: why aren't more companies going public, and I think that's
Speaker 3: a conversation we really need to be having. It is
Speaker 3: concerning to me that so much of the growth is
Speaker 3: happening in the private markets.
Speaker 5: Now.
Speaker 3: My answer to that is not to make the private
Speaker 3: markets look like the public markets. It's to say, what
Speaker 3: are we doing wrong on the public market side.
Speaker 5: There are a lot of factors that work here, of course,
Speaker 5: but I think we're doing some.
Speaker 3: Things wrong on the public market side that make it
Speaker 3: less attractive to be public than it should be.
Speaker 5: And so I'd like us to spend some time working
Speaker 5: on that.
Speaker 2: And when it comes to the biggest users of ETFs
Speaker 2: or advisors, they're about seventy percent ish of all the
Speaker 2: ETF assets. When you look at that market, I think
Speaker 2: like sixty percent are fiduciary fee based, maybe thirty percent
Speaker 2: sty'll get a commission from the mutual fund. Is there
Speaker 2: anything in that intermediary world that you guys look at
Speaker 2: or that you think might need some regulation.
Speaker 3: Well, I mean, we have reg best interest and then
Speaker 3: we put out at the same time we put that out,
Speaker 3: we put a fiduciary interpretation out. So I think we
Speaker 3: have those out there. I think one thing I'm quite
Speaker 3: concerned about is making sure that advice is available to
Speaker 3: everyone at you know, even people who don't have a
Speaker 3: lot of money to invest.
Speaker 5: And that's a.
Speaker 3: Trend that I've seen that troubles me somewhat, which is
Speaker 3: that everyone wants to serve ultra high net worth investors,
Speaker 3: and the investors with the least to invest, who may
Speaker 3: most need not most, but certainly may may need assistance
Speaker 3: and want assistance, can't find it because it's the regulatory
Speaker 3: risks are too high and the rewards are too low.
Speaker 3: So we need to make sure that our regulatory regime
Speaker 3: is not standing in the way of offering services to
Speaker 3: people all across the wealth spectrum. And I think part
Speaker 3: of that, part of what I'm concerned about, is we
Speaker 3: need to not stand in the way of financial professionals
Speaker 3: using technology to make their advice cheaper to provide. And
Speaker 3: that's a direction I'm not sure this commission is heading in.
Speaker 3: I think we're actually we're actually going the other way
Speaker 3: and making it harder to use technology.
Speaker 2: Okay, on that front, when it comes to technology, I
Speaker 2: feel as though the issuers, the et officiers can't say
Speaker 2: anything and people will Index providers seem to be able
Speaker 2: to say anything they want. Advisors have a lot of
Speaker 2: freedom too, but when it comes to like their ticker,
Speaker 2: they can't even defend themselves. Is there any plans to
Speaker 2: loosen that up? Given that social media and the Internet
Speaker 2: has really opened up the floodgates and letting etffiiciers, you know,
Speaker 2: sort of have a little more freedom to talk about
Speaker 2: their funds, defend their products, you know, give more information.
Speaker 5: Yeah.
Speaker 3: I mean, that's an interesting suggestion, and it's one I'd
Speaker 3: love to talk to you little bit more about. I
Speaker 3: think that, I know, the whole nature of communications has
Speaker 3: changed a lot since a lot of our rules were written,
Speaker 3: and I think it does make sense to think about.
Speaker 5: Whether we need to refresh some of those rules.
Speaker 6: I just wanted to talk about complex products. If we
Speaker 6: rewind about two years ago, I think it was October
Speaker 6: twenty twenty one, Gary Gensler came out and said that
Speaker 6: the SEC was looking into new rules for coimplex products.
Speaker 6: There's still question marks about what exactly is a complex product.
Speaker 6: But basically since then, I feel like we haven't heard.
Speaker 4: About complex products or.
Speaker 6: Any potential tightened rules since then. What is the status
Speaker 6: the thinking around that?
Speaker 3: Well, again, I can't speak for other commissioners, but what
Speaker 3: I can say is that we should be thinking about
Speaker 3: again allowing people to use technology to better communicate with investors,
Speaker 3: and to communicate in a way that they not only
Speaker 3: absorb the information, but they really think about it, that
Speaker 3: it prompts them to ask the right kinds of questions
Speaker 3: and things like that.
Speaker 5: But what I don't want us to do, and what
Speaker 5: I don't think.
Speaker 3: We have the authority to do, is to try to
Speaker 3: override people's decisions. Right, people have the right to invest
Speaker 3: their money the way they want. And so when I
Speaker 3: look at these discussions around complex products, it often looks
Speaker 3: to me as if people are saying they want to
Speaker 3: engage in merit regulation, they want to start picking and
Speaker 3: choosing what investments are right for people. And that's just
Speaker 3: not a role that we at the SEC are well
Speaker 3: situated to play. And I think it would be quite
Speaker 3: a departure from our role, which traditionally has been, Look,
Speaker 3: you provide the disclosure, and you let investors and their
Speaker 3: financial professionals make decisions about what's best for a particular investor.
Speaker 1: Next year, sensing a theme here, I've thought next year
Speaker 1: election here in the US there's a chance new administration,
Speaker 1: there's a chance that you might be the next SEC commissioner.
Speaker 1: If your chair, what would we expect from you?
Speaker 3: Look, I think that we need to work with the
Speaker 3: situation we're in now, and my goal at this point
Speaker 3: is to try to convince my colleagues that we ought
Speaker 3: to pivot from some of the agenda we're on and
Speaker 3: try to try to work on a more what I
Speaker 3: would describe as a more productive agenda that again focuses
Speaker 3: on capital formation. I would like, I mean, and not
Speaker 3: to bring up the topic that I know we said
Speaker 3: was closed out. I would like us also to think
Speaker 3: about how we could approach crypto regulation in a way
Speaker 3: that made sense. So that's another item that I think
Speaker 3: should be on.
Speaker 1: Okay, Well, I'm so glad you did that because you
Speaker 1: let me come back to it now. And like in
Speaker 1: good stories, you take the beginning and you go back
Speaker 1: to it at the end. So here I am at
Speaker 1: the end.
Speaker 4: What do we not ask you.
Speaker 1: About a bitcoin at ETF that we should have asked
Speaker 1: you about?
Speaker 5: Oh?
Speaker 3: I think you asked me and every one when everyone
Speaker 3: is going to be approved, and I can't tell you
Speaker 3: that there.
Speaker 6: Is nothing else to ask Okay, actually I have one
Speaker 6: more question on crypto ETFs.
Speaker 4: Sorry to bring us back there again, but.
Speaker 6: It's been interesting, you know, seeing the memos coming out
Speaker 6: from the meetings that the issuers are having with the
Speaker 6: SEC and Eric.
Speaker 4: This is a point that you've raised.
Speaker 6: It's interesting that market makers haven't been in those meetings.
Speaker 4: Why haven't they?
Speaker 5: I can't answer that question.
Speaker 3: I don't know why why they haven't been in meetings,
Speaker 3: and maybe they have been, but I just can't answer
Speaker 3: that question.
Speaker 1: Well, when when they're ready to be in the meetings,
Speaker 1: we know that there's ginger snaps. That's true, Hester Verse,
Speaker 1: thank you so much for joining us at ETF's in
Speaker 1: Depth and as well on the on our ETF Trillions podcast.
Speaker 5: Thanks for having me.
Speaker 1: Thank you, sure.
Speaker 2: Ah, you made it Hester, not you. You don't get
Speaker 2: the cocktails, but it looks like they have cocktails in
Speaker 2: the ten source.
Speaker 4: You're good.
Speaker 2: I'm sure they probably need them up there. You guys
Speaker 2: enjoy us join us for some cocktails in their networking
Speaker 2: for the next hour, and thank you for attending and
Speaker 2: making it the whole time.
Speaker 1: Thank you, thank you, thanks for listening to trillions. Until
Speaker 1: next time you can find us on the Bloomberg Terminal,
Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you'd
Speaker 1: like to listen. We'd love to hear from you. We're
Speaker 1: on Twitter, I'm at Joel Webber Show. He's at Eric Balchunis.
Speaker 1: This episode of Trillions was produced by Magnus and Rickson
Speaker 1: Bye