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SEC Chairman Discusses Rule Changes on HFT

SEC Chair Mary Jo White discussed HFT and the agency's plans for equity market structure in 2015 in a video interview with Bloomberg Market Makers at the SIFMA annual meeting.

SEC Chair Mary Jo White spoke about high-frequency trading yesterday, suggesting that rule changes could be on the horizon but stopping short of any specifics.

“We are studying that soup-to-nuts, and we will make changes,” said White in a video interview with Bloomberg Market Makers’ Stephanie Ruhle at the SIFMA 2014 annual meeting in New York.

“There is no one thing that is HFT,” White told Ruhle, noting that it’s a number of different strategies.

While she stopped short of mentioning any specifics on potential rule changes, White said the commission has conducted investigations of wrongdoing by high-frequency traders and other kinds of market participants.

White also drew a distinction between the SEC’s investigations of misconduct by traders and any potential changes to rules.

“If there needs to be a change in the rules, that is separate from enforcing the rules against misconduct and market manipulation, which the SEC has always done strongly.”

In general, White said the markets, particularly equity markets, had benefited tremendously from technological advances.

“We do have the strongest, most resilient markets in the world. These technological advances have benefits for investors in terms of transaction costs and liquidity. But that doesn't mean they’re perfect. And we want to optimize the level playing field, fairness, and depth quality for companies raising capital.”

Turning to an issue of fairness, White also addressed reports that an outside company, Edgar Online, had disseminated SEC filings to traders faster than the SEC’s own website. White said the SEC is in the process of looking at the academic study’s findings, very carefully. In addition, the SEC is conducting a study of its entire dissemination system. “We will make an adjustment. The goal is to make that information available to the public 100 percent of the time.” White said the agency is looking at data that the studies don’t have at their disposal.

Looking ahead to 2015, White said the SEC will focus on the comprehensive review of equity market structure.  "We want to focus on the resiliency of our market structures. You want to be watching it as it moves and evolves." With a budget of $1.3 billion and 4,100 staffers, the SEC is also implementing Dodd Frank rules while overseeing the markets.

White acknowledged, "There are things we can’t do as well as we should for investors in the markets. I will continue to argue for additional funding."

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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User Rank: Author
11/13/2014 | 9:41:13 AM
Re: SEC Budget from fines
You raise a good point, but the regulators working on this particular settlement ($3.4 billion - actually raised to $4.3 billion) oversee foreign exchange. The SEC doesn't regulate FX, so it doesn't share in this fine. Those mentioned are the Financial Condut Authority (FCA), the CFTC (US) and the Office of the Comptroller of the Currency (OCC) and Finma (Switzerland).

I heard Timothy Massad, chairman of the CFTC speak yesterday at a swaps industry conference. He said the agency's budget is less than what some single dealers spent on cybersecurity.

The CFTC's budget is $280 million vs. SEC's $1.7 billion.

Yes, I believe there is always lobbying on the SEC budget as well.
User Rank: Author
11/12/2014 | 10:08:09 PM
SEC Budget from fines
Many tier-1 banks have just been fined USD 3.2 Billion. Why can't a sizeable share of this be given to the SEC for their activities. Is there lobbying on the SEC budget as well?
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