STA’s 90th Annual Market Structure Conference is officially in the books! On behalf of our staff and board of governors, we’d like to extend our heartfelt thanks to all attendees, speakers and sponsors. It wouldn’t have been possible without you.
When we selected our conference theme for this year – The Next Era – we did so in hopes that the panels and firesides on the agenda would set the tone for a host of market structure and regulatory priorities for 2024 and beyond. Put simply, they did not disappoint. No matter how they tuned in – in-person or virtually – attendees gained a wealth of insight into some of the biggest issues facing financial services today, with senior leaders from buy- and sell-side firms, exchanges, technology vendors and government sharing their perspectives, concerns and visions for the future of the industry.
Couldn’t make it to the conference? Looking for a quick rundown of the topics discussed? We’ve got you covered. Read on for a rundown of 8 expert takeaways on 8 key issues that were covered in this year’s program. We hope you’ll come away with a better understanding of what it will take to find success in this next era – and beyond.
- The Pace of SEC Regulation Accelerates
One recurring theme throughout the conference was concern around the pace and scope of proposed regulations by the SEC, as well as the commission’s perceived lack of engagement with the industry. Multiple speakers pointed to Chair Gary Gensler as the driving force behind sweeping potential changes around order routing, market data, predictive data analytics and more. In fact, one of the most forceful criticisms came from someone who was himself the driving force behind substantial regulatory reform in the equity markets.
“The SEC has moved to a negotiations style of rulemaking,” said Brett Redfearn, CEO of Panorama Financial Markets Advisory and former Director of Trading and Markets for the SEC. “’Let’s ask for the kitchen sink even though we know we won’t get it, and then we’ll dial it back.’ No more roundtables and concept releases. It’s concerning.” - Peirce’s Crypto Sympathies Endure
SEC Commissioner Hester Peirce gave a wide-ranging fireside chat that touched on topics from the pace of regulation to working relationships within the commission – but attendees’ ears really perked up to hear her thoughts on digital assets. Long one of the most pro-crypto voices in government, Peirce has stood by her beliefs in the face of new leadership in Washington.
“The SEC’s approach to crypto isn’t the correct one,” said Peirce. “People have been telling me for years, ‘Just tell me what the rules are and I’ll comply.’ Instead, the SEC stays silent and comes in after the fact with enforcement actions.” - At Last, a Spot Bitcoin ETF
“In October 2021, the SEC approved a Bitcoin futures ETF. We thought they would approve conversion of our spot Bitcoin fund, but they didn’t. We sued and won. Unanimous decision. Tomorrow is the SEC’s deadline to file an appeal to that decision.”
That was the update from Dave LaValle, Global Head of ETFs at Grayscale, during our Thursday afternoon crypto panel. On Friday, attendees learned that the SEC will not appeal the court’s decision, paving the way for this new investment vehicle to become available to the public. - FINRA Remains Vigilant
FINRA has a long history of being one of our nation’s most innovative regulatory bodies, and today is no exception. In addition to a CAT update and a summary of FINRA’s use of AI from CEO Robert Cook, attendees got a breakdown of the organization’s perspective on short sales and its new innovations to spot market manipulation from Stephanie Dumont, EVP of Market Regulation and Transparency Services.
“That’s the challenge firms face: you know what your firm is doing, but you lack a market-wide understanding,” said Dumont. “Our new surveillance patterns can look across firms and identify transactions that don’t make economic sense.” - T+1 Applies the Pressure
The approaching move to a T+1 settlement cycle in 2024 is posing significant challenges for market participants. It’s not just a matter of ensuring best practices are adapted or the proper technology is in place – for more complex investment vehicles, the potential pain points can transcend borders, explained Reggie Brown, Principal at GTS, during the ETF panel.
“The issue with changing settlement times is that some US-listed ETFs have international components,” said Browne. “Problems can arise when settlement times don’t match up. You can have failures, wider spreads, the need for additional capital, etc.” - Options Market Demographics Evolve
Recent years have seen an across-the-board surge in options trading, but perhaps most striking has been the rise of a new class of investors: individuals who treat the markets as a profession, embracing emerging asset classes as they trade from home. Observations from our options panelists reflected these trends.
“We’re observing unprecedented options trading activity from retail as well as institutional investors, banks and market makers,” said Andy Bevers of Cboe Global Markets. “We see a large percentage of this volume as being professional or institutional-lite.” - True 24-Hour Trading Requires Buy-In Across the Industry
Panelists on our 24-hour trading panel discussed how these offerings will define the next era of the industry – including the drivers, demographics and keys for success, such as real-time reporting and readily available market data. But above all, they agreed, there is a need for firms across the industry to embrace innovation for this round-the-clock business model to reach its full potential.
“We want to differentiate, but in this instance, we want everybody there,” said Steve Quirk, Chief Brokerage Officer at Robinhood. “That’s the only way the 24-hour market becomes really robust and seamless and as good as it can be. This is one time we’re saying, ‘Copy us, copy us!’” - AI Adoption Requires Groundwork
Tal Cohen, President, Market Platforms at Nasdaq, gave a fascinating fireside chat that touched on the IPO landscape, the SEC’s proposed market structure reforms and his firm’s operations in Europe. He also laid out his perspective on AI and the crucial foundational work industry firms must do to maximize its value.
“To unleash the power of AI, you need to make a few key investments,” said Cohen. “First, in data management and governance. Second, in the cloud – it must be in your DNA. Finally, in having a mature posture on infosec and a responsible governing structure.”
Compelling as these insights are, they represent just a small sample of all the topics and perspectives that came up during this year’s program. Those who attended the conference, whether in person or virtually, can access the recordings here.
That’s all for this year. Thank you to everyone who made our 90th Annual Market Structure Conference such a success. See you in Orlando in 2024!