Tags: SEC

In Episode 4, we sat down with former SEC Commissioner Troy Paredes of Paredes Strategies LLC. We covered AI, recent developments at the SEC, insights on how to track those issues you care about post-Presidential election and Troy’s bi-monthly podcast Appetite for Disruption, which discusses the business and regulation of fintech.

The history of the relationship between the SEC and STA is a long one.  Both organizations were formed at a pivotal time in the nation’s economic history.

The Securities Act had become law and the Securities and Exchange Commission was formed to regulate the issuance and sale of corporate securities to investors and bolster public confidence in the stock market.

STA was born in the Windy City of Chicago, when local industry professionals invited security traders across the Midwest to join them at their inaugural outing where bylaws were drafted and elections held.

That was August 21, 1934 and while the guiding principle identified back then remain core to STA today it has been the hundreds of individual relationships between SEC Commissioners and STA Chairs that in combination have enabled it to strive.

One such example, is former Commissioner Troy Paredes who after being appointed by President George W. Bush went on to serve at the Commission from August 2008 to August 2013. Commissioner Paredes, like so many of his fellow commissioners, always kept an open-door for STA.

As always, Commissioner Paredes provided awesome insights and well informed opinions. Enjoy the Listen.

SEC Market Structure Speech on Issuers

The Nexus of Equity Market Structure and Investor Relations: Remarks at the 2019 Annual Conference of the National Investor Relations Institute

“..the Division of Trading and Markets is intensely reviewing a series of important questions and policy initiatives that I believe should be of great interest to issuers and their investors as they participate in the U.S. equity markets.” – Brett Redfearn, Director Division of Trading & Markets

Ms. Allison Lee, Confirmation

On Thursday, June 20th, The U.S. Senate by voice vote, confirmed Allison Lee  to serve as a Securities and Exchange commissioner, bringing the markets regulator back to full strength.

SEC Commissioner Peirce on Crypto & Grill

SEC Commissioner Hester Peirce discusses the role and responsibilities of the SEC, and how that impacts the crypto landscape with Crypto & Grill.

Read June newsletter here

Open Call Report – SEC FinHub Guidance on “Investment Contracts” & Digital Assets

STA Open Call – April 25, 2019 Call Notes[

SEC FinHub Guidance on Digital Assets

Kristin Boggiano, Chief Legal Officer, AlphaPoint

Kapil Barthi, Global Head of Trading Markets, AlphaPoint

to learn more about asset digitization visit


Opening Remarks

SEC Rule 606 – last night the SEC extended the required start date for firms to begin collecting data required by Rules 606 (a) & (b), from the May 20th to Oct 1st.  While this relief will be well received by many firms, the industry is still waiting on FAQs to be published by the Commission. link

STA letter to SEC on Strikes – STA filed a letter with the SEC earlier this month on proliferation of option strikes. Today there are over 900,000 series of options available for quoting and trading, on 4,300 products (or, “issue”). Letter

May 21 NYC Event – STA Women in Finance Committee, “STA WIF” will be hosting our annual, Evening of Recognition and Education on May 21st in NYC. The event features the presentation of the Ken Heath Award, which honors those men who have made a genuine and meaningful impact on the advancement of women in finance. Details

Executive Summary

In Nov. ‘18, the SEC announced the formation of its Strategic Hub for Innovation and Financial Technology, aka, SEC FinHub. Among the goals or purposes of FinHub is to enable the SEC to actively engage with innovators, developers, and entrepreneurs. Since forming FinHub has made two significant announcements, one being a May 31st Forum on Digital Asset that will open to public and the other being guidance on digital assets, the topic of tonight’s call.  

Q#1: What does AlphaPoint do & where does it fit into the Digital Asset space?   

AlphaPoint is a Financial Technology firm founded in 2013. It has 100+ Global Customers in 35+ countries and about 100 employees We offer technology solutions for both primary issuance and secondary trading of digital assets.

Q#2 Please describe the background on the SEC guidance on Digital Assets.

In Nov. of 2018, “TimesTalk w/ Chairman Clayton” stated that in his confirmation hearing in March of 2017 not one person asked him a question about bitcoin, eth, distributed ledger technology, or blockchain.  By July of 2017, the SEC had to address the new technology how the digital assets fell into the regulated security markets. Chairman Clayton emphasized investor protection & the SEC’s role to “not to vote” but to provide an “even playing field in which other people vote.” 

Q#3 Please describe the Framework of the SEC’s guidance on “Investment Contracts” & Digital Assets

First, as Commissioner Peirce pointed out, the guidance & no-action letters – are NOT law.  They are people’s opinions – very important people’s opinions.   The Framework is to (1) provide clarity to an industry clamoring for lines of what defines an offering, and (2) to further define the Howey Test.

Q#4 Please outline what the additional framework states as applied to digital assets and ICOs.

The SEC introduced the concept of “Active Participant” – a concept that didn’t exist before. In evaluating whether a digital asset previously sold as a security should be reevaluated at the time of later offers or sales as a security, there would be additional considerations as they relate to the “efforts of others,” including: And there are more “relevant considerations” including:

Whether he distributed ledger network and digital asset are fully developed and operational. Holders of the digital asset are immediately able to use it for its intended functionality on the network, particularly where there are built-in incentives to encourage such use.

The digital assets’ creation and structure is designed and implemented to meet the needs of its users, rather than to feed speculation as to its value or development of its network. For example, the digital asset can only be used on the network and generally can be held or transferred only in amounts that correspond to a purchaser’s expected use.

Q#5 What do you think DA industry can learn from mature asset classes about how to engage regulators.

There is a very well defined process in equities and options market structure today. The party bringing the innovation engages SEC and CFTC via rule filings. Once SEC or CFTC find these proposals acceptable, the rule filings are sometimes published for industry comments where industry participants get to challenge or support an idea. In short there is a collaborative process in these mature industries and engaging regulators at an early stage is always a good idea.

download pdf version here

[1] This brief is meant for informational purposes only and therefore should not be considered legal advice. STA’s goal is to raise awareness on industry developments and encourage dialogue.

Open Call Report – SEC Roundtable on Thinly Traded Securities

Good evening and welcome to tonight’s Open Call on the  SEC Roundtable on Thinly Traded Securities and an update on the SEC Transaction fee pilot, aka the Access fee pilot. Tonight’s call is brought to you by the STA Foundation a 501 c 3 corporation that serves as STA’s educational arm.

Last October, the Department of the Treasury published a report that assessed the U.S. capital markets and offered recommendations for enhancement. Overtime, the Treasury’s report has received a good amount of attention for its content to such a degree that Chairman Clayton identified it as one of two resources he will be using in identifying areas of improvement within our equity markets.

In Chairman’s April 10th speech he noted, and I quote, “The issue of facilitating capital formation and increasing the attractiveness of the public markets for smaller companies is one of my highest priorities as SEC Chairman.  I am concerned that Main Street investors are bearing costs (and missing investment opportunities) as a result of the shrinking number of U.S.-listed public companies.

Chairman Clayton then went on to say:

“The Capital Markets Report highlighted many of these issues and recommended that the SEC consider allowing issuers of thinly-traded securities to suspend unlisted trading privileges, or UTP, for a stock so that it would trade on a smaller number of venues until liquidity reached a minimum threshold.  I anticipate that this recommendation will receive close review at the staff’s roundtable.”

An executive summary report is here

SEC Chairman Jay Clayton: Standing Man

One of the more memorable scenes in the popular Tom Hank’s movie, Bridge of Spies is when captured Russian spy Abel Rylance describes how Hank’s conduct reminds him of an old neighbor.  A neighbor with a strong and humble character which he described as “stoikiy muzhik” or roughly translated, he was a Standing Man.

If you can recall this scene, then I would encourage you to watch a recent interview with our new SEC Chairman, Jay Clayton hosted by the Center for Capital Markets Competitiveness. As you search for the right words, or metaphors to describe your first impression, let me know if Standing Man comes to your mind as did with me. If you’re not a Tom Hank’s fan and have never seen any of his movies, I would still encourage you to watch the interview.

Engaging these new leaders effectively needs to begin with understanding who they are.

Our industry is experiencing dramatic change. New President, new SEC Chairman, new CEO of FINRA, new chairman of the House Subcommittee on Capital Markets and the list goes on.

Engaging these new leaders effectively needs to begin with understanding who they are. Interviews as opposed to speeches provide a meaningful opportunity to learn what their values, skills, personalities and visions of tomorrow are. Congratulations and best of luck to you, Chairman Clayton.

SEC Chairman Jay Clayton July 26th interview at Center for Capital Markets Competitiveness  HERE

Bridge of Spies – Standing Man Scene on YouTube

Rudolf Abel: This one time, I was at the age of your son, our house was overrun by partisan border guards. Dozens of them. My father was beaten, my mother was beaten, and this man, my father’s friend, he was beaten. And I watched this man. Every time they hit him, he stood back up again. So they hit him harder. Still he got back to his feet. I think because of this they stopped the beating. They let him live. ‘Stoikiy muzhik’. I remember them saying. ” Which sort of means like uh, ‘standing man’… standing man…

An SEC Chairman Like Jay Clayton

There are few more important or influential roles in the financial markets than that of U.S. Securities and Exchange Commission (SEC) Chairman. The person who assumes this responsibility is charged with fulfilling the SEC’s mission to protect the interests of investors, ensure fair and orderly markets, and facilitate capital formation. This mission statement carries with it a certain degree of diversity and as such, requires distinct skill sets in ensuring its success. Finding a Chairman with expertise in all three is extremely difficult, if not impossible, in today’s complex financial system and markets.

Recently, Jay Clayton, an investment banking attorney was nominated to fill the position of SEC Chairman and since his announcement many of us have been trying to learn more about this man as we ponder an SEC under a Donald Trump Administration. As for myself, I have never met Mr. Clayton, therefore am not qualified to determine what type of Chairman he would be or if he is qualified. That decision will be made by individuals closer to the process with better information. Having said that, it is natural to wonder how the SEC would look and what its impact on our economy would be, if the incoming Chair has a skill set like Mr. Clayton’s. In particular, as it relates to board diversity and capital formation.

Like many former Chairmen, Mr. Clayton is an attorney; however he has never worked in a regulatory or law enforcement capacity. Rather his expertise is in investment banking. At first glance, a Chairman such as this would add diversity, as measured by skill set to an eventual five-person Commission that historically has been characterized with individuals with enforcement and regulatory backgrounds. Board diversity has been greatly studied and proven to provide certain efficiencies and incremental value to shareholders in corporations. Whether efficiencies can also be obtained within a regulatory agency comprised of a diverse board is difficult to predict because the frequency of such occurrences and data is limited. However, when one considers the trilateral mission of the SEC most would conclude that a diverse five-person “board” is exactly what is needed and not just today, but going forward.

Protecting the interests of investors requires enforcement expertise; ensuring fair and orderly markets requires quantitative expertise in understanding market structure; and, capital formation requires investment banking expertise. Given the unlikelihood that there exists an individual with the expertise of an attorney general, an economist and investment banker, charting a path towards building a diverse SEC board appears to be a natural course of action.It is important to note that board diversity does not equate to equal power among board members. It is the Chairman who sets the agenda and prioritizes resources for the SEC. Therefore, the skill set of the Chairman does carry influence in the approval process for anyone nominated. Although it does not suggest that a Chairman with investment banking expertise could not be effective in ensuring that the SEC fulfills its enforcement and fairness roles.

The mandates in the SEC’s mission are defined and always present. However, they do not possess weightings, such as; 70% investor protection, 20% fair and orderly markets and 10% capital formation, which need to be maintained at all times. Whether this was done intentionally, I don’t know. In the absence of clarity, it is rational to assume that there is some flexibility on the weightings based on the changing needs of our economy. This begs an important question that those in deciding on Mr. Clayton’s nomination will undoubtedly ask themselves: What does our country and economy need in its SEC Chairman at this moment in time? To those making this decision, I hope you will keep an open mind to someone like Mr. Clayton, as the role of capital formation is critical for companies of all sizes and is a catalyst for driving economic strength, overall security and well-being of our nation.

See Light House article here

SEC Proposed Amendments on Order Routing Disclosures Part II – RETAIL

At a July 13, open meeting the Securities and Exchange Commission (SEC) voted unanimously “to propose amendments to Rules 600 and 606 of Regulation NMS to require new disclosures by broker-dealers to institutional customers about the routing and execution of their orders, and to propose targeted enhancements to current order routing disclosures for retail customers”.


David Weisberger
Managing Director
Global Head of Trading Analytics Products
IHS Markit


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STA Open Call Notes are free for members.
Not a member?
Please consider a $10 donation to the STA Foundation here>

SEC Order Handling Disclosure Proposal – Part I – Overview

STA has made multiple trips to Washington DC over the summer using two (2) sets of Talking Points:
-Talking Points July 13, 2016
-Talking Points June 15, 2016

Approval of Lisa Fairfax (Democrat) & Hester Peirce (Republican) for the open SEC Commissioner positions is unlikely to happen in 2016. While both candidates passed the Senate Banking Subcommittee, they have yet to receive approval from the entire U.S. Senate. This is the result of a backlog in government appointments and a few vocal Senators who object to the candidates.


Manisha Kimmel
Chief Regulatory Officer
Thomson Reuters


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STA Open Call Notes are free for members.
Not a member?
Please consider a $10 donation to the STA Foundation here>

“Clear-Eyes” by SEC Chair Mary Jo White

At last week’s SEC Equity Market Structure Advisory Committee (EMSAC), Chair White ended her opening remarks with a statement that has become a hallmark on her approach in effecting regulatory changes, “As I have said before, while we do not require perfect solutions, our regulatory changes must be informed by clear-eyed, unbiased, and fact-based assessments of the likely impacts — positive and negative — on market quality for investors and issuers”.

The STA and the SEC were formed at the same time in our nation’s history. Over time the agendas of both organizations have been closely aligned…

Chair White is correct that she has spoken these words before. In fact it was June 2014 at a Sandler O’Neill Conference when she outlined the Commission’s market structure policy direction that I recall hearing them for the first time. As judged by her actions since then, the Chair has remained true to her words. While this most recent ESMAC meeting will be remembered by the lively debate and engagement among the committee members and exchange representatives the consistency found in Chair White’s words is something which should make us all feel that changes will be based on empirical data and a thorough vetting process.

For those who don’t already know, the STA and the SEC were formed at the same time in our nation’s history. Over time the agendas of both organizations have been closely aligned and their philosophies on rule-making have been based on the importance of, as Chair White mentioned, “…gathering a diverse set of market participants to address complex, potentially very significant market structure issues”.

Our markets are the most liquid in the world because they serve a variety of business models. Unfortunately, when groups or roundtables are put together to discuss improvements, the seats at these tables are not always equal. Just like Thanksgiving at the Toes household, someone always gets a shorter chair on the corner. Is that person sitting at the table, yes. Are they uncomfortable and feel out of place, yes. In the case of the SEC ESMAC there are groups of participants who are not represented.

The Commission has taken steps to address this, but their remedies still fall short of being 100% equal. Feelings of frustration are natural and will appear in the remarks of those impacted. We do however hope that these groups remain engaged and realize that ESMAC is an advisory committee and not the rule making authority. We also hope that committee members continue to reach out to those groups not represented in order to seek their opinions on these matters. We are all guardians of the market and it is critical that the lines of communication between groups with different business models and opinions always remain open.

Read our April Newsletter here >

Venture Markets & Senate Hearing on SEC Nominees

On March 16th, the STA hosted an Open Call on venture markets and the Main Street Growth Act (H.R. 4638) which would allow for the creation of venture exchanges. All attendees received a complimentary report on the Senate Banking nomination hearing for Lisa Fairfax and Hester Peirce to the Securities & Exchange Commission.


Cromwell Coulson
President, Chief Executive Officer and Director
OTC Markets


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STA Open Call Notes are free for members.
Not a member?
Please consider a $10 donation to the STA Foundation here>