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Speaker 1: For a very own. David Weston, host of Wall Street Week,

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Speaker 1: is joined for a conversation with Gary Ginstler, the chair

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Speaker 1: of the sec David.

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Speaker 2: Kelly somebody you know well. Actually Gary Gensler is the

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Speaker 2: chair of the Securities in Exchange commention. Thanks so much

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Speaker 2: for being here with us in New York.

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Speaker 1: No, it's so terrific to be here Valentine's Day.

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Speaker 2: Now, about that heavy Valentine's Day, I hope you're taking

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Speaker 2: care of that.

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Speaker 1: I hope well, but you are with that great wife.

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Speaker 2: Of Youah, I did the first thing in the morning.

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Speaker 2: So let's first talk about the news of the day,

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Speaker 2: this typographical era apparently from Lyft. It's too soon, I

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Speaker 2: assume for you to know what happened, and you don't

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Speaker 2: talk about any dific cases. But I want to ask

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Speaker 2: more general question about fat fingers. Is it part of

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Speaker 2: your jurisdiction to make sure that public traded companies have

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Speaker 2: certain mechanisms in place to minimize We can never eliminate mistakes,

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Speaker 2: but to minimize them.

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Speaker 1: Well, so it's really part of their responsibility. You use

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Speaker 1: the term fat finger It could be a trading shop

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Speaker 1: that sends a flood of orders to an exchange. In

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Speaker 1: the old days, they called it a fat finger because

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Speaker 1: somebody's finger hit. Now it could be in an algorithm,

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Speaker 1: or even that your filings, your press releases, and your

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Speaker 1: annual reports are accurate. So that's really up to them.

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Speaker 1: But yes, we have a role with the Securities and

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Speaker 1: Exchange Commission to oversee to make sure that people don't

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Speaker 1: defraud the public and that they publish accurate financials.

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Speaker 2: So when something like this happens, you call somebody up

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Speaker 2: and say, are we're looking into this to just make

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Speaker 2: sure there wasn't something efficient.

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Speaker 1: I can't speak of individual things. Let me step back.

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Speaker 1: So I'm chair of a five thousand person agency. A

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Speaker 1: quarter of our agency does enforcement, another quarter does examination.

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Speaker 1: They don't call me up. I don't call them up

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Speaker 1: on a daily basis, say look at this. They're really talented, David.

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Speaker 1: They figure out what to We literally get something like

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Speaker 1: forty to fifty thousand tips, complaints and referrals a year,

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Speaker 1: and they have to figure out which ones to pursue,

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Speaker 1: which ones not to and sosion I read about things

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Speaker 1: in the press and I go, oh, I didn't know

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Speaker 1: we were investigating. That's a really that's great. Our Boston office

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Speaker 1: is on that.

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Speaker 2: Another subject very much in the press has been for

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Speaker 2: some time now, obviously, is bitcoin. The ETF Spot Bitcoin

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Speaker 2: that you approved, and as I understand, part of the

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Speaker 2: reason you did it, the explanation for it was you

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Speaker 2: felt that the CMA futures Bitcoin situation would be good

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Speaker 2: enough to indicate if there's any market manipulation going on,

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Speaker 2: are you far enough into it to know whether that

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Speaker 2: theory holds true that in fact you can tell from

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Speaker 2: that CME futures trading what might be going on with Spot.

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Speaker 1: So it's a little bit more nuanced than that. But

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Speaker 1: several years ago, back in twenty twenty one, there was

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Speaker 1: a product that went live, so to speak, an exchange

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Speaker 1: traded fund wrapped around these bitcoin futures at the Chicago

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Speaker 1: Mercantil Exchange. And then a different set of products came

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Speaker 1: to us and asked to lists on the stock exchanges.

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Speaker 1: And while we had denied like two dozen of these

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Speaker 1: over about five years, a court in Washington said no,

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Speaker 1: they thought we had not gotten that right, and they

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Speaker 1: remanded it back to us. And I thought, really the

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Speaker 1: most sustainable thing forward was to approve these. Given the

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Speaker 1: court ruling in terms of the statistics we really do

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Speaker 1: look at and sure as best we can there's not

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Speaker 1: fraud manipulation. But one of the challenges on the bitcoin markets, David,

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Speaker 1: is so much of its traded on trading platforms that

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Speaker 1: are non compliant with our laws. Now, bitcoin's not a security,

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Speaker 1: but there are trading on those platforms a lot of

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Speaker 1: other crypto tokens. Without prejudging anyone that'd be careful that

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Speaker 1: with hundreds of other crypto tokens on there, likely there's

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Speaker 1: other securities. You're in court in a number of these

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Speaker 1: cases in front of various judges and panels, and so

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Speaker 1: the American public when you're investing in something like bitcoin

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Speaker 1: to be aware when it's a highly speculative asset. Number two,

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Speaker 1: it's generally trading on some platform that is not fully

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Speaker 1: compliant with the securities loss for other things they're doing.

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Speaker 1: And number three I had meant sin is think about

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Speaker 1: what use case? What is the actual use case? When

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Speaker 1: you buy one hundred shares of XYZ stock, you kind

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Speaker 1: of know what's behind that company, what that they're there is.

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Speaker 2: You said you're not going to prejudge. I wouldn't expect

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Speaker 2: you to prejudge, So let me ask you to prejudge.

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Speaker 1: Yeah, David, I figured that.

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Speaker 2: A big question people are asking is ethereum. Is there

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Speaker 2: a principal difference, a reasonable difference between bitcoin and ethereum.

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Speaker 2: Now I understand you'll have to have an application to

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Speaker 2: look at all the details and stuff, but just in

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Speaker 2: a general sense, is there distinction between the two for

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Speaker 2: this purpose?

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Speaker 1: So you help the American public understand why. I'm not

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Speaker 1: going to answer that because I am, in one, just

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Speaker 1: one member of a five member commission. But two, there's

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Speaker 1: various applications in front of our commission. And just as

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Speaker 1: you wouldn't want to know a judge to prejudge, a

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Speaker 1: commissioner shouldn't prejudge those applications are in front of us

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Speaker 1: right now.

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Speaker 2: Okay, let's talk about the disclosure of climate issues, which

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Speaker 2: has been pending before the Commission and it has not

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Speaker 2: come out yet. It's not clear. Why can you give

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Speaker 2: us as the timetable and when you may have those regulations?

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Speaker 1: So let me just step back. So the Securities and

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Speaker 1: Exchange Commission is not a climate regulator. We are not

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Speaker 1: a regulator of climate risk. But we oversee companies raising

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Speaker 1: money in the public and they disclose their material risk

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Speaker 1: to you, or they're supposed to disclose some material risks

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Speaker 1: out of rules that have been around for decades. And

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Speaker 1: many of those companies that are already making significant disclosures.

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Speaker 1: I think something like ninety percent of the top thousand

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Speaker 1: companies in the US by market cap disclose something about climate.

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Speaker 1: Over half to disclose their greenhouse gas emissions. So there

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Speaker 1: we have a role to bring some consistency, some comparability.

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Speaker 1: You can compare and contrast. That's our role. It's a

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Speaker 1: securities market role, not a climate role. You asked about timing, Ah,

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Speaker 1: they're the great question. We proposed that role back in

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Speaker 1: March of twenty twenty two. We tend to take somewhere

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Speaker 1: in the order of a year and a half to

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Speaker 1: two years to adopt roles. If we adopt them, can't prejudge,

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Speaker 1: but I would say, here's the one wrinkled of this,

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Speaker 1: my friend, sixteen thousand public comments. We got four four

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Speaker 1: hundred of them, unique different comments. We not only have

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Speaker 1: to read them, we have to consider them. We have

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Speaker 1: to think about what adjustments we make. That's the biggest

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Speaker 1: docket of comments we've ever received on a rule. So

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Speaker 1: that's part of why it's you know, we do our

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Speaker 1: work carefully.

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Speaker 2: Well, I'm curious about behind the scenes, which you take

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Speaker 2: into account. And one thing's very specifically. We have an

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Speaker 2: election year this year. You might have noticed there may

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Speaker 2: be changes in the Congress in the presidency. There's a

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Speaker 2: Congression Review Act that says, basically, if you don't get

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Speaker 2: some of these rules out before something like six months

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Speaker 2: before the election, they can be reversed by the next Congress.

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Speaker 2: Do you even take that into account and thinking about

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Speaker 2: the timing and bringing regulations out.

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Speaker 1: I try not to have this managed by the clock.

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Speaker 1: And you know everybody says, oh, no, come on, no,

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Speaker 1: it's really about getting it right and allowing that staff

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Speaker 1: to work their part, the economists, the lawyers, the policy folks,

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Speaker 1: the five commissioners to weigh in. But we're certainly aware.

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Speaker 1: I mean, Congress is a really important part of you know,

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Speaker 1: they ask a lot of questions about every one of

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Speaker 1: our important initiatives, but this climate risk disclosure. But again,

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Speaker 1: we want to get it right and not against the clock.

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Speaker 2: You also have just brought out a regulation involving hedge

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Speaker 2: funds and trading in US treasuries. A lot of complaints

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Speaker 2: about it. A lot of gnashing of teeth, if I

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Speaker 2: can call it that on far with some of the

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Speaker 2: hedge funds. Do you take into account the possibility of

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Speaker 2: challenges in court and putting together regulation because you're going

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Speaker 2: to get challenged, do you shape the regulation try to

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Speaker 2: minimize the chance of being overturned by the court of

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Speaker 2: abil It's.

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Speaker 1: Going to be a yes. But let me just answer something.

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Speaker 1: What we've done is the US Treasury market is the

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Speaker 1: base of the rest of our capital markets. It's also

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Speaker 1: how when you talk to Chair Pal or sometimes you

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Speaker 1: talk to former Secretary of Summers about monetary policy. It's

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Speaker 1: how we do our monetary policy. So the treasury market

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Speaker 1: is so critical. It's how we also maintain our dollar

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Speaker 1: dominance around the globe. So what we've had as a

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Speaker 1: series of four or fives around the US Treasury market

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Speaker 1: central clearing and yes, something about the dealers, and by

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Speaker 1: the way, it's mostly about something called principal trading firms,

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Speaker 1: not hedge funds, not hedge funds. But to your question,

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Speaker 1: we live within the law, and we live within how

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Speaker 1: the courts interpret the law, and ultimately the Supreme Court

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Speaker 1: rights the law of the land as the great Chief

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Speaker 1: Justice Marshall once wrote two hundred years ago. So we

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Speaker 1: do take that into consideration, and we're appropriate, we pivot,

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Speaker 1: we moderate, taking into consideration, and it's critical the American

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Speaker 1: public have confidence in their sec but it's also critical

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Speaker 1: that a rule will be sustained in court because then

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Speaker 1: it can actually help investors and issuers for hopefully years

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Speaker 1: to come.

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Speaker 2: Gary, thank you so much for being with us. Really appreciation.

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Speaker 2: That's Gary Ginster, Chair of the Securities and Exchange