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STA discussion document with congressional staff on: Consolidated Audit Trail; US Treasury Report and ETPs

Specific Comments:
Consolidated Audit Trail – Recommendation for a Revised Implementation Plan
STA delivered a letter to Thesys CAT, LLC and the Operating Committee on the draft
CAT Reporting Technical Specifications for Industry Members, distributed on
September 7, 2017. In addition to representing the interests of our members on
matters relating to the CAT NMS Plan, STA is also a member on the Financial
Information Forum (“FIF”) Consolidated Audit Trail Working Group. STA and FIF
recommend that the Operating Committee “request that schedule and content relief
be granted by the SEC so that a revised implementation plan can be established.”
STA believes that a revised and comprehensive implementation plan extending existing
deadlines and phasing in other asset classes and certain types of information, such as
Personal Identification Identifiers (“PIIs”), is a more effective strategy.

U.S. Department of the Treasury Oct. 2017 Report: “A Financial System That
Creates Economic Opportunities” (“Report”) – STA was pleased to have engaged
the U.S. Department of the Treasury on their report which was in response to core
principles identified in Executive Order 13772 dated, February 3, 2017. STA agrees in
particular with the Report’s observation that the “one-size-fits-all market structure is
not working well for smaller companies that are currently experiencing limited
liquidity for their shares”. STA looks forward to continuing to work with the
Department of Treasury and other regulatory agencies on recommendations and
observations made in the Report, including the effect the supplementary leverage ratio
may have on the options market.

Holistic review on the impact equity rules have on the trading of Exchange
Traded Products (“ETPs”) – Exchange Traded Funds (“ETFs”) and Exchange Traded
Notes (“ETNs”) are unique investment vehicles which offer investors exposure to the
performance of indices or desired strategies. While ETFs and ETNs trade on equity
exchanges their differences from publicly traded companies merit consideration of
whether there should be different trading rules. STA is recommending a
holistic review on the impact equity rules have on the trading and market making in
ETPs and whether investors would be better served if new rules or exemptions to
existing rules were implemented. STA believes evidence exists when the arbitrage,
market making provision is encumbered, ETPs become inefficient.1 Rules STA is
reviewing include: Rule 5250, Payments for Market Making by ETP Sponsors; Unlisted
Trading Privileges; special consideration, perhaps even exemptions from pilots, on
publicly traded companies; and Regulation M, which is designed to prevent the
manipulation by individuals with an interest in the outcome of an offering.

PDF version here