Securities Regulation Daily Wrap Up, EXCHANGES AND MARKET REGULATION—SEC’s Peirce urges regulatory restraint on ‘shiny objects‘ and ‘novelties‘, (May 12, 2026)
Commissioner Peirce said the SEC cannot block a new ETF from going to market if the ETF’s sponsor adheres to the rules, gets its disclosures right, and finds an exchange to list it.
The proper SEC response to a “dizzying melee” of new products that “look like they belong in the sports, entertainment, politics, or bizarre-story-of-the-day sections of the newspaper” may be “quite muted,” SEC Commissioner Hester Peirce said in remarks to the 13th Annual Conference on Financial Markets Regulation. Repeating a theme she has stated before, Peirce said the SEC is statutorily limited in what it can regulate and does not dictate “what, whether, or how often retail investors can trade.”
Peirce cited the growing popularity of “shiny objects” enticing retail traders like prediction market contracts, Zero-Day-to-Expiration options, and ETFs based on commodities like crypto, gold, silver, and perpetual futures.
“I do not celebrate everything that is going on in the markets now,” said Peirce.
But just because she is not necessarily a fan does not mean she thinks the SEC should step in.
“Don’t expect to see a flurry of prescriptive rulemakings,” she said.
She noted that jurisdictional lines set out by Congress determine whether and how regulators can react to new products or new technologies. For example, if a new ETF’s sponsor “adheres to the rules, gets its disclosures right, and finds an exchange to list it, the SEC cannot block the ETF from going to market.”
Regulatory restraint should not be read as a seal of SEC approval, Peirce said. “To the contrary, the fact that we do not screen products for merit means that people should read absolutely nothing about what the SEC or anyone who works here thinks about a product’s usefulness or longevity from the fact that it has gone live on SEC-regulated markets.”
Even if the SEC can act, that does not mean it necessarily should, she indicated. Regulations deprive investors of choice and often impose heavy and persistent costs. And investors often know more than regulators.
“[M]arket participants, who face the consequences of their bad decisions, generally are better informed about the facts on the ground than a regulator, even a regulator who has consulted smart academics and powerful datasets,” she stated.
In any case, Peirce believes the latest flashy investing fads will wane.
“I expect that some of these novelties will fade away as investors lose interest, and their legal, technological, and market infrastructure will be repurposed for more durable investment and risk management products,” she said.
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