Tags: SEC

SEC Market Structure Advisory Committee May 13th Meeting Review

Presenter: Eric Noll, President & CEO, Convergex

SEC EMSAC inaugural meeting discussion topics
• Should the SEC allow for publically displayed locked markets
• Should the industry allow for locked markets so long as lower access fees are put in place
• Appears to be support among ESMAC members for a block exemption to Rule 611. Details tbd.
• Changing the priority on the book; add customer type to price/time
• Effectiveness of subcommittees for providing recommendations on specific issues to the ESMAC

Full Open Call transcript (PDF)>

SEC Chair White has Groove

by Jim Toes

Testifying for over three (3) hours before a full House Financial Services Committee, SEC Chair White was clear and methodical when describing the Commission’s agenda and her responses were with clear eyes. In her remarks Chair White laid out a case for the SEC’s 2016 budget request of $1.72 billion, or a $222 million YoY increase. This article is not about whether that amount or any amount is appropriate, rather we’d like to highlight how the SEC is funded and how the equity market is unfairly and unwisely burdened with the entire cost of regulating entities overseen by the SEC.

There are many who think that the SEC is underfunded and that the fees we highlight present a small cost when compared to the overall size of the market. There is truth in both of these statements yet the question still begs to be asked, “is this a sound practice?”

As pointed out in a report by the Washington D.C. firm Williams & Jensen, the methodology by which today’s SEC collects fees was established in 2002 and then modified by the Dodd-Frank Act in 2010. The SEC’s budget in 2001 was $ 423mln, but the Dodd-Frank Act significantly increased its responsibilities and added more asset classes. At the same time, the Dodd-Frank Act shifted 100% of the responsibility for funding the SEC to entities and investors that pay section 31a fees when buying or selling equities. While other fees that previously contributed to funding the SEC are directed to the general Treasury. In short, the mechanism for funding the SEC was narrowed rather than broadened to offset the costs of regulating other asset classes and activities.

There are many who think that the SEC is underfunded and that the fees we highlight present a small cost when compared to the overall size of the market. There is truth in both of these statements yet the question still begs to be asked, “is this a sound practice?” When one entity subsidizes or pays 100% of the costs of regulating another entity or activity, inefficiencies often result. These inefficiencies may not be on the scale of a doomsday scenario, but nonetheless they can be meaningful. So, we hope that as the discussions on the SEC FY 2016 budget take place, the means by which the SEC raises its required funds is considered and that the end result is something other than “we’ll just increase the Section 31a fees a few more pennies”.

Read the Williams & Jensen report on Chair White’s testimony

Read the full Williams & Jensen report

Read full March Newsletter HERE>

SEC MIDAS System

Special Presenter: Charles Collver, SEC Office of Analytics and Research

In the aftermath of the Flash Crash in 2010, it became clear that technology has progressed so far and so fast that the traditional market surveillance systems of our chief regulator had been unable to keep pace. While the industry waits for the development of a consolidated audit trail system that would capture customer and order event information across markets, the SEC acquired a market data and analysis solution system called MIDAS, an acronym for Market Information Data Analytics System, in June 2012.

Full Open Call transcript (PDF)>