President's Journal

Register Now for STA's 77th Annual

Written by: John Giesea

26 May 2010

STA’s 77th Annual Conference and Business Meeting
Omni Shoreham Hotel, Washington D.C.
September 22-25, 2010

Has Washington become the capital of finance as well as politics? And how do they intersect? With Congress considering the largest financial reform in 80 years, the SEC again comprehensively examining market structure, and an upcoming election, it certainly seems so.

While we may not come to a definitive answer, we will certainly gain insight and engage in both rigorous discussion and substantive debate at our 77th Annual Business Meeting and Convention to be held in Washington D.C. from September 22 – 25, 2010. Our theme, Wall Street & Washington: Finding the Balance, strikes at the heart of these current developments and the potential effects that legislation could have over our futures in the Securities Industry. STA has always thought there is an appropriate equilibrium between regulation and competition and we strive to articulate that.

Consistent with our history of excellence, we have constructed a program that is both rich in content as well as entertaining for our members, their families and their firms. We believe our lineup is compelling and that you will not find more high quality content concentrated into a few days anywhere else. Our program highlights include:

• REGULATORY INSIGHT from Washington senior leadership such as SEC Chairman Mary L. Schapiro, Commissioner Troy A. Paredes & Senator Mike Crapo

• INDUSTRY EXPERTS including CBOE Chairman & CEO William Brodsky, Dr. Robert Barbera – Chief Economist at ITG and Larry Tabb, Founder & CEO of TABB Group

• MARKET PARTICIPANT PANELS : Buy Side, Exchanges, Regulation and Trading & Technology

• ENTERTAINMENT featuring an evening with Golf’s Sharpest Wit, David Feherty of CBS Sports and “Monuments by Moonlight” – a night time trolley tour of Washington’s iconic architecture and our nation’s heritage.

The strength of our organization ultimately resides in our membership, the contributions we make to one another, to our industry and to our Nation. Please join us for an experience you won’t want to miss – click on link at the top, right of this page.

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STA - Attention Sponsor/Vendor - Invitation

Written by: John Giesea

10 May 2010

Security Traders Association, Inc.
To: Friends of STA
From: John C. Giesea
Date: May 10, 2010
Re: STA’s 77th Annual Conference – “Wall Street & Washington – Finding the Balance”

We have now embarked on our sponsorship effort for the 77th Annual in Washington D.C., September 22-25, 2010, and invite your participation.

STA has earned a reputation for presenting timely and informative conferences, respectful of the importance of timely and important industry topics and, as well, cost. Speed is not just relevant in execution terms but also with changes, implemented and proposed, to a market structure with ever increasing importance attached to even the most minuscule changes. We are committed to enhancing STA’s reputation in September by presenting another powerful lineup of speakers. STA is the only organization that brings together all segments of the industry—regulators and legislators, market structure and thought leaders.

In 2010, we have embedded the benefits of our usual May Washington Conference within our Annual Program. Wednesday, September 22nd, we lead off with SEC Chairman Mary Schapiro and she will be followed by representatives of the Senate, the House and the Federal Reserve. In the ensuing two days you will hear from an economist, a highly regarded political forecaster, a unique “achiever” and senior industry executives, In addition we will present four potent panel discussions covering the most critical issues of the day. Our Thursday Dinner will be highlighted by special guest David Feherty.

In order to accomplish these aggressive goals, sponsorship plays a pivotal role. Our supporters allow us to keep registration fees at a fraction of other conferences, while providing a deeper program with 2.5 days of business sessions. As a not-for-profit organization, we are most appreciative of our long-time sponsors and hope that we can expand our list of supporters through newer firms as the rebuilding of “Wall Street” moves forward.

We acknowledge the sensitivity to expense. We also wish to advise you that our Washington venue was selected based upon several factors. In 2010 there is no doubt that Washington has become the financial center. In addition, the venue provides speaker opportunities that would not be possible at greater distance. Our location also provides reduced cost both in terms of time and dollars. We remain committed to provide the STA brand of excellence.

As we develop our program it will be updated on our web site, along with acknowledgement of our sponsors and vendors (www.securitytraders.org > Industry Resources > Sponsors). You may also view videos of previous conferences that demonstrate the quality of our content by going to our web site > Industry Resources > Conference Videos (this area also lists previous sponsors and vendors).

On behalf of the entire STA Board of Governors, I thank you for your continued support and invite your call or email with any questions you may have.

Regards,

John

203-202-7680
jgiesea@securitytraders.org

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STA Activates Trader Alert - Opposing Kaufman Amendment

Written by: John Giesea

7 May 2010

On May 5, 2010, Senator Ted Kaufman (D-DE) filed Amendment Number SA 3845 to the financial regulatory reform legislation, S. 3217 the Restoring American Financial Stability Act of 2010, currently under consideration on the Senate floor. Senator Kaufman’s amendment would amend Section 11A of the Securities Exchange Act of 1934, the section that instructs the SEC to facilitate the development of a National Market System.

I strongly oppose this amendment and urge you to vote against it if it comes to the Senate floor for consideration.

Section 11A begins with a series of “findings of Congress” concluding that the securities markets are an important national asset; that new data processing and communication techniques create the opportunity for more efficient markets; and that the linking of all markets will bring about the Congressional goals of fostering competition, increasing information available to investors, and facilitating the offsetting of orders contributing to best execution.

Section 11A was enacted in 1975 and the development of the markets in its aftermath have been historically beneficial for investors. The success of the existing Congressional policy is a matter of record. U.S. equity markets passed their stress test in the Fall of 2008, while some other markets did not. This argues for allowing markets to evolve as the result of competition under the oversight of the SEC, and that incremental changes should be made when appropriate. Regulation should be balanced against competition and regulation should not favor any one business model or platform.

Senator Kaufman’s amendment would redirect the Congressional policy away from allowing SEC-regulated markets to evolve through competition and innovation.

Senator Kaufman’s amendment would have the effect of directing the SEC to restrict markets that currently provide liquidity to long term investors and price trades with quote and trade information obtained through their linkages with other markets. Adoption of this amendment would have the unfortunate effect of Congress “picking winners and losers.” The impact on investors will be predictable: execution costs will go up as liquidity providers pass the greater costs of doing business on to their customers.

I respectfully, but strongly, urge you to oppose this amendment which will cause irreparable harm to investors, U.S. capital markets and the economy.

Sincerely,

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STA Submits Concept Release - See News > Comments

Written by: John Giesea

23 April 2010

Security Traders Association

STA Outlines Principles to Drive Market Structure; Calls for National Market Surveillance System
Weighs In on SEC Market Structure Concept Release

(Darien: April 22, 2010) In its meeting on April 22, 2010, The Board of Governors of the The Security Traders Association (STA), the leading advocacy and education organization for professional equity traders in the U.S., approved the initial response of the Association to the SEC’s Concept Release on Market Structure. A formal Comment Letter will be issued in due course.

Noting that the equity markets remained stable during the financial crisis of 2008-2009, the Association holds:

• The equity markets are functioning properly, and there are no signs of significant deficiencies or an inability to perform their important functions;

• All investors are protected by regulations that promote efficient market structures and foster competition between and among exchanges, marketplaces, and dealers.

STA believes, however, that at least one major deficiency currently exists in the SEC’s oversight of today’s markets. Technology has progressed so far and so fast that the traditional market surveillance systems of the Self Regulatory Organizations have been unable to keep pace. They do not receive market wide data and support regulation on a system wide basis. The SEC needs to develop a National Market Surveillance System, linked to and integrated with the technological surveillance systems of the SROs but independent of them. Regulatory gaps exist today because there is no one regulator with the capacity to technologically observe, examine and evaluate intra- and inter-market trading. The STA is encouraged, however, by recent SEC actions to develop a consolidated audit trail system that would capture customer and order event information across markets. These positions are consistent with the STA’s long held belief in an appropriate balance between regulation and competition.

With regards to the principles guiding market structure, the STA has evaluated the current U.S. market structure against the objectives set by Congress in 1975 for the creation of a National Market System and finds that the Congress’ goals have largely been achieved. Moving forward, the STA believes that certain core principles regarding the interaction between markets and regulation should be applied by the Commission in its consideration of market structure. These are:

1. Markets evolve. Periodic regulatory reviews are appropriate and healthy. As noted by the Congressional Oversight Panel in its January, 2009 Report:

The essential debate… [is] between wise regulation and counterproductive regulation. Wise regulation helps make markets more competitive and transparent, empowers consumers with effective disclosure to make rational decisions, effectively polices markets for force and fraud, and reduces systemic risk.

Counterproductive regulation hampers competitive markets, creates moral hazard, stifles innovation, and diminishes the role of personal responsibility in our economy. It passes on greater costs than benefits to consumers, and needlessly restricts personal freedom.

2. Incremental change is best. The STA has consistently recommended that rules and regulations be changed incrementally to better identify and address any unintended consequences. While markets are dynamic, it is important to implement changes when the market participants are not reacting emotionally. Consequences are easier to identify in stable markets. Changes are best made in stable markets and not during politically charged times or times of financial market unrest.

3. Balanced competition and regulation is the correct formula. The SEC has been shepherding the markets toward a truly national market system since 1975, through the promulgation of rules and regulations designed to encourage access and connectivity. In its 2008 White Paper, the STA stated that:

the appropriate balance between regulation and competition yields the best opportunity for achieving a national market system and we believe the SEC’s recent implementation of Regulation NMS was a major advancement in the quest for a national market system because it required access and connectivity, enabling competition.

4. Regulations should not favor any one business model or platform. Regulations should be “business model neutral” and work to insure only that investors are protected and not disadvantaged by the fiduciaries and other market participants tasked with serving their needs. The SEC should not pick “winners and losers.”

5. Enforcement. The existing body of market and trading regulations is extensive and comprehensive. Aggressive enforcement of those rules will provide adequate investor protection and increase investor confidence more than the adoption of additional regulations. Investor confidence is damaged by every report of discovered fraud and manipulation but not as much as it is damaged by reports of inadequate surveillance and enforcement of existing regulations by the SEC. The SEC must insure that adequate resources are applied to this mission.

Said Brett Mock: STA Chairman: “For 75 years the STA has been an important voice in market structure because our organization develops consensus responses that take into account the viewpoints of traders from a variety of market segments. We have consistently held that regulation should foster innovation and competition for the creation and sustaining of fair, liquid, and orderly markets. We believe the principles we have articulated should serve as both the driver of market structure regulation and the criteria against which any new regulation be evaluated.”

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STA’s 77th Annual – September 22-25, 2010

Written by: John Giesea

4 April 2010

We are well on our way in developing our 77th edition of STA’s Annual Conference and encourage your participation as a registrant, participant, sponsor or exhibitor. Sponsor and vendor opportunities are now available and registration will open May 1st.

Speed is not just relevant in execution terms but also with changes, implemented and proposed, to a market structure with ever increasing importance attached to even the most minuscule changes. We are committed to enhancing STA’s reputation in September by presenting another powerful lineup of speakers and panels.

In 2010, we have embedded the benefits of our usual May Washington Conference within our Annual Program. Wednesday, September 22nd. We lead off with SEC Chairman Mary Schapiro and she will be followed by representatives from the Senate, the House and the Federal Reserve.

In the ensuing two days (Thursday-Friday) you will hear from an economist, a political forecaster, a unique “achiever” and senior industry leaders. In addition, four potent and timely panel discussions covering the most critical issues of the day will be presented.

STA, a not for profit organization, has earned a reputation for presenting timely, informative and high quality conferences. We are confident that our 2010 Washington edition will be compelling from multiple perspectives: content, venue, cost and time efficiency.

Please join us.

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STA - Washington Visit - March 10-11, 2010

Written by: John Giesea

12 March 2010

Chairman Brett Mock, Vice Chairman Joe Cangemi and I conducted several visits over Wednesday and Thursday and I will attempt to provide a brief overview.

1. I have never seen the Hill as busy or intense. Fortunately market structure is trumped by several other issues being intensely debated – Health Care and Regulatory Reform are front and center and one can certainly feel the depth of partisanship that exists today.
2. The SEC’s final rule on the modified uptick has drawn the attention of members on the Hill. Senator Crapo and Minority Whip Cantor have both sent Chairman Schapiro letters of concern over rules not supported by data. Cantor’s letter also expressed concern about the SEC potentially moving forward on market structure rules prior to conducting a broad review of market structure. There was concern expressed that the Flash and Non-Public Trading Interest (with specific reference to IOI’s) rules should have been wrapped into the Concept Release and not separated out – a position STA agrees with.
3. With regard to the Short Sale discussion – we urged the market maker exemption (with emphasis on the option side) should be examined before implementation of the rule, not after.
4. We expressed our consensus that markets are working and that our membership has not signaled any issue that stands in need of immediate attention and that the holistic approach taken on by the Concept Release (in form and substance) is the correct path towards examining current market structure. The process is expected to be a lengthy one.
5. We also spoke consistently in opposition to the proposed Transaction Tax – must not assume this to be a “dead item’.
6. Market wide surveillance was another discussion point. There are indications that this is an active agenda item at the SEC and in discussion with FINRA and other market centers.
7. SEC – areas we received questions included the IOI process of defining and integrating into the public quote, monitoring and regulating HFT and the two-tier market concerns.

Visits included:

Senator Jim Bunning (R-KY)
Senator Mike Crapo (R-ID) – Staff Visit
Senator Michael Johanns (R-NE) – Staff Visit
Senator Jeff Merkley (D-OR) – Staff Visit
Speaker Nancy Pelosi (D-CA) – Staff Visit
Chairman Barney Frank (D-MA) – Staff Visit
Minority Whip Erik Cantor (R-VA) – Staff Visit
Representative Michele Bachmann (R-MN) – Staff Visit
Representative Spencer Bachus (R-AL) – Staff Visit
Representative John Campbell (R-CA) – Staff Visit
Representative Bill Foster (D-IL)
Representative Scott Garrett (R-NJ)
Representative Jeb Hensarling (R-TX) – Staff Visit
Representative Paul Kanjorski (D-PA)
Representative Peter King (R-NY) – Staff Visit
Representative Ed Perlmutter (R-CO)
Representative Tom Price (R-GA) – Staff Visit
SEC Commissioner Troy Paredes
Robert Cook – SEC Division of Trading & Markets – and staff

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