Does the SQL Spec require a GROUP BY in EXISTS ()
I found it in the SQL 2011 spec...


  If the &lt;select list&gt; “*” is simply contained in a &lt;table subquery&gt; that is immediately contained in an &lt;exists predicate&gt;, then the &lt;select list&gt; is equivalent to a &lt;value expression&gt; that is an arbitrary &lt;literal&gt;.


This confirms that by * not being equivalent to an arbitrary literal in this context that it is in fact PostgreSQL breaking the spec.

Keep in mind this is a distinct problem from 

SELECT *
FROM ( VALUES (1),(2),(3) ) AS t(x)
HAVING count(*) &gt; 1


Which both databases reject.

PostgreSQL,


  ERROR:  column "t.x" must appear in the GROUP BY clause or be used in an aggregate function


SQL Server,


  Column 't.x' is invalid in the select list because it is not contained in either an aggregate function or the GROUP BY clause.


Why this bug persists in PostgreSQL

Thanks goes to RhodiumToad on irc.freenode.net/#PostgreSQL for his help trouble shooting this. He also points out the difficulty in resolving this situation


  20:33 &lt; RhodiumToad> the one problem is that in pg you can do  exists(select func() from ...   where the func() is an SRF that might return 0 rows


An SRF is a set returning function.

In PostgreSQL, we can do for instance use an SRF to generate a series from 1-10 (generate_series is in core)

SELECT * FROM generate_series(1,10); 


And, we likewise can put it right here.

SELECT generate_series(1,10);


Two of them together give us a cross-join (cartesian product)

SELECT generate_series(1,10), generate_series(1,2);


But, if either of those return 0-rows you get nothing.. Effectually the same as this

SELECT * FROM ( VALUES (1) ) AS t(x)
CROSS JOIN ( SELECT 1 LIMIT 0 ) AS g;


And, that's the problem with optimizing this out entirely. You can have an SRF in a select-list inside of an EXIST statement that returns 0-rows, and forces the EXISTS to evaluate to false.