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

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