Robert Feinberg: SEC Isn't in Hurry to Clear Up Tech Glitches

Tuesday, 02 Oct 2012 05:02 PM

By Robert Feinberg

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Securities and Exchange Commission Chairwoman Mary Schapiro delivered the opening statement and has been participating in a roundtable on the relationship between technology and trading and a spate of highly publicized breakdowns in the securities markets, including the Flash Crash, failures in initial public offerings of BATS and Facebook and a major execution failure that almost took down the firm of Knight Capital.

Schapiro listed a number of measures the SEC has taken, including single-stock circuit breakers, bans on stub quotes and naked access, pre-trade rules and requiring high-frequency trading (HFT) traders to identify themselves, but many observers have questioned whether these measures make any real difference, as industry trade associations resist regulation.

Schapiro asserted that “after the Flash Crash, the Commission was ‘well-positioned’ to respond in order to reduce the likelihood of another such event.”

As she spoke, I was thinking that even if this is true, which is doubtful, it doesn’t mean that the agency acted effectively. For example, another action Schapiro touted was a rule that the SEC has been working on since 1980 to establish a “consolidated audit trail” to enable effective market surveillance.

However, even a cursory examination of this product will reveal that all it does is direct the industry to develop a consensus as to how to proceed. On CNBC, Fast Money host Scott Wapner waved a copy of Schapiro’s statement and howled in disbelief.

Simultaneous with the last portion of the first panel of the roundtable, CNBC had some experts in its studio to talk about some of the issues. Billionaire investor Mark Cuban assailed HFT as serving no purpose, and even one of the roundtable participants denied that it is an important source of revenue for his firm.

Hedge fund manager Leon Cooperman called for the reinstatement of the “uptick” rule in the hope that it would slow down the pace of trading, and he lamented that market makers are having a difficult time establishing a profitable business model.

All of this is taking place against the backdrop of the virtual paralysis of both the SEC and its cousin, the Commodity Futures Trading Commission (CFTC). A former colleague of Schapiro confirmed for me last week that CFTC Chairman Gary Gensler lacks the votes to convene the agency to consider any of the long list of regulations that Congress has mandated in order to implement the Dodd-Frank Act.

Now it’s the same story at the SEC, where a majority of the Commission, including a former industry lobbyist, has refused even to put out for comment a proposal to enhance the regulation of money funds, which have been identified by the Financial Stability Oversight Council as a potential source of systemic risk. According to this source, Schapiro is eagerly looking forward to retirement and rarely goes to the office anymore.

Therefore, no regulations can be considered until the agency is restructured some time after the turn of the year.

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Santa Comes Early at Pump as Gasoline Falls to Lowest Since 2009

Sunday, 21 Dec 2014 18:03 PM

The average price of regular gasoline at U.S. pumps slid to the lowest level since May 15, 2009, dropping 24.68 cents in . . .

Saudi Oil Chief: No Conspiracy Behind Plunging Oil Prices

Sunday, 21 Dec 2014 09:33 AM

Saudi Arabia's oil chief on Sunday dismissed allegations that his kingdom conspired to bring down oil prices in order to . . .

Economist Beaman Sees Opportunities for US Food, Infrastructure in Cuba

Sunday, 21 Dec 2014 09:22 AM

President Barack Obama's decision to resume diplomatic ties with Cuba won't instantly create a bevy of opportunities for . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved