Security Traders Association Board Urges SEC to Conduct Holistic Review of Market Structure

NEW YORK, April 9, 2014 /PRNewswire/ -- In a letter to its members, the Security Traders Association Board of Governors recommends a holistic review of market structure, describes a financial transaction tax idea with a dual mandate as, "unrealistic" and highlights its New York affiliate's conference this Thursday, which will feature Chad Johnson, Esq., Chief Investor Protection, N.Y. State Office of the Attorney General.  

"While many of the recent conversations pertaining to high-frequency trading (HFT) are not new, it is evident that the debate has intensified and broadened to every participant in the marketplace," the letter says. "Over the past two weeks, CEOs and other business leaders have issued statements on where they believe HFT fits into today's marketplace, and offered a litany of solutions. It is clear that there is a lack of consensus on what is a major piece of today's market structure.

"Conversations pertaining to HFT have also included a host of other micro-market-structure issues, including: all forms of payment for order flow, co-location, measurements for best execution, the role and governance of the Securities Information Processor (SIP); uptick rule, cancellation fees and whether today's legal definitions provide adequate protection for investors," the STA Board adds. "The breadth and interconnection of these issues is such that the STA recommends that the Securities and Exchange Commission undertake a holistic review of market structure. It is important to note that 'review' does not mean 'change.'  A review based on empirical data will go a long way toward answering questions where a wide divergence of opinions exists."

In addition, the STA Board's letter cautions Congressional leaders against implementing a new financial transaction tax (FTT).  The letter reiterates STA's long-held position that a transaction tax would raise the cost of investing and hurt liquidity and capital formation.  "It is unrealistic to expect any such tax to achieve a dual mandate of changing behavior that some may consider harmful while also raising revenue for public coffers. If an FTT materially changes behavior, much of the anticipated revenue would not materialize, leaving those investors whose behavior was not deemed in need of changing to offset any revenue shortfalls."

Click here to see the full letter.

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SOURCE Security Traders Association