Thank you, Mr. Chairman, for holding this hearing. I also want to welcome Mr. Pitt and thank him for joining us here today.
Mr. Chairman, I had the opportunity to sit down with Mr. Pitt earlier this month, and came away from our conversation with great respect for the depth of his knowledge about the many issues affecting America's securities market. He struck me as being fair-minded and balanced in his approach to the complex questions that he will encounter at the agency.
Obviously, in assuming the leadership of the SEC, Mr. Pitt would take on the critical responsibility of maintaining the honesty and integrity of our nation's securities markets. It is a charge that I believe Chairman Levitt sought dutifully, and admirably to uphold, and I would be remiss if I failed to acknowledge his work at the agency.
In my view, maintaining the integrity of America's markets is the SEC's paramount responsibility - because it promotes market efficiency, and ultimately, reduces the cost of investment.
While I may have, at various points, during my previous career disagreed with the agency, I have long felt that the SEC, particularly under Chairman Levitt's stewardship, has done as credible and effective a job as possible in undertaking the enormous task of managing our markets.
And as a result, America's securities markets are the envy of the world.
However, our dominance should never be taken for granted - nor considered a foregone conclusion in perpetuity. If our markets are to remain strong, we must vigorously pursue even greater efficiency, transparency and competition. Our ability to maintain a position of dominance will be shaped in many ways by the extent to which the SEC works to ensure that our markets remain efficient, reliable and progressive places to do business.
These characteristics need to be attained in both benign and stressful market environments. In fact, crisis management may ultimately prove to be the attribute by which the effectiveness of the next SEC chairman is evaluated.
The U.S. securities market has in many ways provided the fuel for the expansion of the global marketplace. Both domestically, and abroad, it has driven economic growth and been a force for global, technological and cultural change. In doing so, our capital markets have grown stronger, more liquid and more adaptable to ever-changing economic conditions around the world and here at home.
We are in the midst of a period like none other. The democratization of the markets has led to millions of new investors, and 48% of U.S. households own equities either directly or indirectly through mutual funds, 401(k) plans or other pension accounts. The socio-economic demographics of those who invest have changed as well, with more middle-income individuals than ever before now enjoying the benefits of equity ownership and investment in America's capital markets.
Mr. Chairman, I look forward to Mr. Pitt's testimony before the committee today, and his insights about the direction he will take the SEC in this era of globalization and technology.
I'm also look forward to his thoughts on the ways in which the agency will seek to mitigate market fragmentation; handle the emergence of new trading technologies, and the ways in which he will seek to promote increased competition.
To be certain, there are a great many issues that the SEC will have to deal with immediately - including transaction fees and the pay parity issues that this committee has sought to remedy. But issues such as the agency's fair disclosure (Reg. FD) requirements, the issues of accounting standards, analyst recommendations and the issue of payment for order flow are all incredibly important items that must be dealt with as they get to the heart of the integrity and credibility of our markets - and the trust that investors have in them.
Mr. Chairman I want to thank you again for holding this hearing. I look forward to Mr. Pitt's testimony.