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October 2019
Featured Article

The Real Value of STA*
By Doug Clark , Virtu Financial
STA Chairman

It has been another fascinating year in the world of market structure. The current SEC regime continues to show historic ambition in their desire to improve secondary markets, as well as the competitiveness of primary markets relative to private equity. 

In their ambition, regulators have over the past two or so years, presented the industry with a number of ideas, proposals and guidance notices. Not all of these ideas have been received enthusiastically by all corners of our industry. Indeed, the SEC has weighed in on some of the most contentious issues of our time.

Asset managers, pension plans, exchanges, vendors and dealers must now grapple with a variety of potential changes. These include a potential Transaction Fee Pilot in 2020, OPR review, asymmetric speedbumps, 606 reporting reform, finalizing the Consolidated Audit Trail, multiple new equity markets on the horizon, a pilot to study transparency in the corporate paper market, guidance around market data fees and the potential suspension of Universal Trading Protocols for illiquid issues. And that is just the U.S. market. Canada brings it own list of unique challenges. 

As the number of seats in our industry continues to decline, and market and regulatory complexity increases, our role as educator, advocate and networking facilitator takes on increased value. Attendance at our annual conference suggests that I am not alone in this belief. 

While the vast number of issues at play makes for great conference programs, it also creates a real burden for our membership, particularly for smaller to mid-size players and regional firms, which may lack the scale to follow the various debates in real time and as closely as they may wish to. This has, in my mind, made organizations like STA more valuable in recent years. As the number of seats in our industry continues to decline, and market and regulatory complexity increases, our role as educator, advocate and networking facilitator takes on increased value. Attendance at our annual conference suggests that I am not alone in this belief. 

In our efforts to educate and represent various constituencies, we recognized that the impact of these potential changes looks different for every firm. As such, we focused heavily on reaching out to this community and engaging its members in order to understand and address their specific concerns. Our efforts can be seen in work we’ve done this year on MiFID II, Continuing Education, Diversity and Inclusion, and reporting three-party algorithm usage in the new 606 reports – an issue that both STA and our friends at FIF have been hyper-focused on for most of 2019.

But STA is about more than just regulatory advocacy and education. We also present dozens of networking opportunities across the continent. These events allow members to meet potential clients, solutions providers and, yes, even future bosses. They allow competitors a chance to compare notes on regulatory changes and solution providers. They are a great catalyst for younger members looking to build relationships and learn about the industry at large. And they are a great place to make some wonderful friendships. 

In many cases, the relationships forged are not just commercial ones, but rather real friendships that will last long after we are drummed out of the industry. These are relationships started at STA and Canadian STA events and built over time. These friends become important sources of information, guidance and referral over the years. To me, this is the real value of STA.

*Excerpts from Oct. 2, 2019 speech at
STA's 86th Annual Market Structure Conference
From the Hill

SEC Issues Statement on Market Structure Innovation for Thinly Traded Securities
The Securities and Exchange Commission today issued a statement that invites exchanges and other market participants to submit innovative proposals designed to improve the secondary market structure for exchange listed equity securities that trade in lower volumes, commonly referred to as "thinly traded securities."
SEC Announces the Formation of Asset Management Advisory Committee
The Securities and Exchange Commission today announced the formation of its Asset Management Advisory Committee. The committee was formed to provide the Commission with diverse perspectives on asset management, and related advice and recommendations. Topics the committee may address include trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology and service providers.
FIF Comment Letter on CAT
Since the inception of Rule 613, FIF has been deeply integrated in the formation of the CAT NMS Plan, the development of the CAT Industry Member Technical Specifications (“IM Tech Specs”), and has supported the Participants’ and the Plan Processors’ understanding of critical implementation issues that have and will continue to proliferate.
Open Call

ETF Rule

Proposed in 2018 and approved by the SEC in September 2019, the ETF rule allows exchange-traded funds that meet certain conditions to go to market without the delay of obtaining an exemptive relief order and also makes custom creation/redemption baskets available for all ETFs. Designed to improve ETF regulation, the rule aims to streamline the conditions around exemptive relief, making it easier for companies to bring their ETFs to market.

Join us as we discuss the ETF Rule 
with

Eric Pollackov
Global Head of ETF Capital Markets
Invesco

 Monday, Nov. 4
4:30 p.m. - 5:00 p.m. ET
Dial in: 1-800-346-2923
Participant Code: 562 945#

Plus an STA Update on
SEC FIMSAC Roundtable
“Thinly Traded” Securities
STA in DC

Comment Letter: Asymmetric Delay

It has long been STA’s view that liquidity providers contribute to the overall quality of markets to the benefit of investors. While we have advocated for regulators to find modern ways to incentivize their existence, we do not believe the introduction of asymmetric delays is one such way. Therefore, while we appreciate the intended goals of the Proposal and applaud the creativity in its design, we respectfully recommend that the Commission disapprove it.
STA Women in Finance
The Importance of Congressional Hearings
Global Liquidity Partners
STA WIF Co-Chair

In other words, there is power in congressional hearings that go beyond drafting legislation. While the financial services industry has pivoted on diversity and inclusion, real change requires the focus of management and hearings such as this one provide a meaningful catalyst towards achieving that goal.
Lighthouse
 brought to you by JonesTrading

Killing Our Frankensteins
By Jim Toes , STA

While official data is not yet publicly available, figures being mentioned in the public domain are that of the 100 billion data points being captured on daily basis, more than 40% are related to options activity. If these figures are correct, then a 40% allocation of CAT expenses to the listed options markets would be a Frankensteinian event.
Event Notice
 brought to you by Citadel Securities
STA New York 2019 International Reception and Holiday Party
Help support Cody Strong for a Cure and brighten the holidays for children with pediatric cancer

Wednesday, Nov. 6

Pier A
22 Battery Place, New York
5:30 p.m. - 9:30 p.m.
STA in the News
brought to you by Forefront Communications

SEC Commissioner Criticizes Audit Trail Project
Commissioner Hester M. Peirce is “disturbed” by the amount of data that will soon be collected by the SEC’s consolidated audit trail, she said Friday at a Security Traders Association conference in Washington.
Morgan Stanley, Goldman Make Their Own Direct-Listing Pitches
From the STA Conference in Washington, DC — Silicon Valley investors are touting direct listings to startups as a way to sidestep Wall Street banks and the IPO process. The biggest investment banks want to make sure they stay in the mix.
The Former CFO for Salesforce and Pandora Has Some Advice for Startups Avoiding the Public Markets: ‘Go Out Sooner Rather Than Later’
From the STA Conference in Washington, DC — The former chief financial officer of Salesforce has some simple advice for startups eyeing the public market: Don’t wait. Steve Cakebread helped steer the software company through an IPO in 2004. He’s also spent time as Pandora Music’s CFO and currently serves in that role for publicly-listed branding company, Yext.
Check out photos from

STA's 86th Annual Market Structure Conference:
Realizing Opportunity
STA Student in Finance Membership

STA has created a new membership classification for full-time undergraduate and postgraduate students called  Student in Finance , or “STA SIF . ” STA SIF Membership is FREE and is ideal for students who want to be informed on topics and issues within the financial services industry and to connect with securities industry professionals.

If you have or know a student who wants to take their first step towards the financial services industry, have them apply today!
Media Inquiries
Sam Belden
Forefront Communications Group
212-320-8986
sbelden@forefrontcomms.com