Tags: Wall Street Firms | Stock Market | Issues | Regulation

Wall Street Firms Said to Seek Bigger Say in Market Issues

Friday, 07 November 2014 04:56 PM

A major Wall Street trade group is lobbying to get legislation passed that would give trading firms, banks and institutional investors a greater say in how the U.S. stock market is governed, according to three people familiar with the plans.

The Securities Industry and Financial Markets Association (SIFMA) is making the case to lawmakers on Capitol Hill that the costs to implement and maintain market initiatives to its members, which include about 400 banks, brokers and asset managers, are significant, yet they have little input in crafting those rules. SIFMA has drafted the legislation and is looking for sympathetic ears, the people said.

The lobbying effort is in the early stages and there is no guarantee that SIFMA will be successful in getting the legislation passed, the sources said.

The sources declined to be identified because they were not permitted to speak with the media. SIFMA declined to comment.

Currently, only self-regulated organizations, or SROs, which include registered stock and options exchanges and the Financial Industry Regulatory Authority, vote on matters related to what is known as the National Market System. SIFMA is seeking a vote for banks and another vote for asset managers in such matters.

The issue has long been a thorn in the side of SIFMA, but was pushed to the forefront in recent months as the SROs attempted to pick a manager for the stock market data processor that was at the center of a three-hour trading halt in Nasdaq-listed stocks last autumn, one source said. The contract was awarded to Nasdaq OMX Group on Wednesday, but only after months of deadlock among the exchanges.

The SROs also recently drafted the rules for a one-year program to see if raising the minimum trading increments for the stocks of companies with small- and mid-sized capitalizations will lead to an increase in trading in those names. Several in the securities industry have complained that the plan is overly complicated and will be expensive to implement.

Brokerages have to pay exchanges for trading data that they must subscribe to by law to prove they are getting the best possible executions for their customers. They feel like they are being "held hostage" by the exchanges because they have no say on the fees they have to pay exchanges for data that they help create by trading, said two of the sources.

The Wall Street firms are included in industry committees that make recommendations to the SROs on major market issues, but their recommendations are not binding.

In July, SIFMA published a list of market structure recommendations that included: lowering the access fees that exchanges charge; not forcing brokers to connect to exchanges that have less than 1 percent of overall market volume; and making order routing disclosures more transparent and easier to understand for retail investors.

© 2019 Thomson/Reuters. All rights reserved.

   
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A major Wall Street trade group is lobbying to get legislation passed that would give trading firms, banks and institutional investors a greater say in how the U.S. stock market is governed, according to three people familiar with the plans.
Wall Street Firms, Stock Market, Issues, Regulation
466
2014-56-07
Friday, 07 November 2014 04:56 PM
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