Letter from the Chairman

Dear Fellow STA Members,

It is an honor to hold the position of your 2014 STA Chairman and I look forward to representing our industry in the coming year. Today, it seems everyone has an opinion on the financial industry and who we are as individuals. Hollywood, for example, is having its award shows and there is a movie out that puts Wall Street in a negative light. We all need to take pride and ownership for our industry, stop focusing on the negatives and start promoting the positives. Wall Street does a lot for the capital-formation process of this great country and we need to remind people of it. All of us need to be a “Best Actor” and lead by the example of best practices, ethics and conduct. We all need to be “Best Supporting Actors” and mentor, volunteer, teach, and give back to our industry and communities. Let’s work together to keep our Wall Street in a positive light.

“…as we debate the issues, we always need to remember what is best for the investor is best for our industry.”

The Security Traders Association is an investment-industry group made up of traders that has been around for over 80 years, dating back to the Securities Act of 1934. It all starts with our members, almost 4,000 strong, from 24 affiliates all over the U.S. and Canada. Overall, STA believes in four core principles:

• Better regulation, not just more regulation – let’s look at what’s already on the books and see how we can improve things rather than just adding;
• Paying attention to due process – incremental changes are best; let’s have comment periods, pilot programs, run cost/benefit analysis, and try to find out what the unintended consequences are before you throw a new rule at us;
• Rules need to be clear, transparent, consistent, and balance competition with regulation;
• Regulation should not favor any one business model or platform.

Today, there are still many challenges to our market structure. But as we debate the issues, we always need to remember what is best for the investor is best for our industry. In the past month, several SEC commissioners have expressed a need to conduct a review on market structure. These speeches, coupled with Congress’ recent hearings on market-structure issues such as Dodd Frank, Volcker and the JOBS Act, lead us to expect things to heat up from a market structure and regulatory front in 2014. We expect to be engaged early this year with both legislators and regulators on some of the following issues:

• The discussions of a complete review and overhaul of market structure dating back to the SEC’s concept release of 2010;
• Order-routing best practices and standards;
• The Volcker Rule;
• System failures, outages, and testing;
• The discussions on rebates, payments for order flow, the maker/taker model, and the potential pilot for increased tick sizes.

Just last week the SEC laid out its strategic plan, touching on some of the issues I mentioned as well as a few more, including: considering requiring mutual funds to provide additional information on holdings; ensuring fair access to trading systems; impacts of automated trading; strengthening the incentives for investors to display trading interest; enhancing post-trade transparency of alternative trading systems; and guarding against technology failures.

I encourage you to get more involved, learn, speak up, be proactive, and be positive. STA strives to be the voice of the trader and we want to make a difference and be part of the rulemaking process. We represent you and we want to hear from you on what issues are important.