In the wake of the GameStop frenzy in 2021, the Securities and Exchange Commission (SEC) has implemented significant reforms aimed at enhancing market resilience and transparency. Here are the key changes:

T+1 Settlement: The SEC has transitioned to a one-business-day settlement cycle, known as T+1 settlement, in response to challenges highlighted during the meme stock volatility of 2021. This shift aims to reduce the need for additional collateral and trading restrictions by clearinghouses and brokers.

Short Selling and Hedge Fund Disclosures: Addressing the heavy shorting of stocks during the 2021 saga, the SEC has introduced new rules to increase transparency around hedge fund activities, including their investment exposures and short selling positions.

Market Structure Overhaul: Recognizing flaws in retail trading, the SEC proposed sweeping changes in 2022 to reduce conflicts of interest, particularly regarding payment for order flow practices. The agency seeks to incentivize brokers to route retail orders to exchanges, fostering competition and mitigating conflicts of interest.