The Security Traders Association (“STA”) is pleased to offer comment on FINRA Regulatory Notice 15-13 which proposes exemptions to the TAF for proprietary trading firms. The STA is comprised of 24 affiliate organizations1 in North America, whose membership is comprised of individuals employed in the financial services industry. The STA relies on its Trading Issue Advisory Committees for input on its comment letters. For this particular comment letter the STA relied predominately on its Listed Options Committee which is comprised of liquidity providers, characterized as option market makers and proprietary trading firms, 2 and representatives from exchanges and retail brokerage firms.
STA believes that in the aftermath of the 2007 financial crisis certain regulatory actions have increased costs for all trading centers. In addition, there have been unique regulatory events with corresponding costs specific to liquidity providers in the listed options market with acute impacts to varying subsets. 3 These regulatory costs, while not the only factor, have contributed greatly to the decrease in the overall number of liquidity providers and their make-up as measured by percentage changes in market makers and proprietary trading firms.