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UPDATE 1-Yellen says SEC will prepare report on retail trading volatility

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(Adds quotes on stock market activity, bitcoin)

WASHINGTON, Feb 18 (Reuters) - U.S. Treasury Secretary JanetYellen said on Thursday that an increased prevalence ofzero-commission trading has spurred retail investors to get moreinvolved in stocks, and the Securities and Exchange Commissionwill prepare a report on trading practices amid recentvolatility.

"Our broad conclusion was that markets worked reasonablywell," with core infrastructure resilient despite heavy tradingand high volatility, Yellen told CNBC in an interview, referringto a recent meeting of regulators on retail trading that led toheightened trading in GameStop and other stocks favored onsocial media.

"We really need to look at whether the trading practices areconsistent with investor protection and fair and efficientmarkets," she added.

Regarding high stock valuations amid high unemployment,Yellen said this was partly due to a very low interest rateenvironment that has chased money into stocks.

"In a world of very low interest rates, price-earnings typemultiples tend to be high," she said, adding: "there are maybesectors where we should be very careful."

Yellen also said the market for U.S. Treasury debt remains"robust" and that she sees no issues with the Treasury's abilityto finance the U.S. budget deficit. The Federal Reserve will buywhatever Treasury debt is appropriate for the central bank'smonetary policy goals, she added.

Asked if she wanted to regulate cryptocurrencies such asbitcoin, Yellen called it "a high-risk, speculative investment"that has seen a recent surge in value. The top priority was toensure that bitcoin is not used as a vehicle for illicittransactions and that investor protections are maintained, shesaid.

Ensuring that firms dealing in bitcoin and othercryptocurrencies "adhere to their regulatory responsibilities Ithink is certainly important," Yellen added.(Reporting by David Lawder and Andrea Shalal; Editing by LeslieAdler and Dan Grebler)