5 of the Hottest Topics Straight from the STA Market Structure Conference Stage

With Wall Street registering a balmy 90 degrees on Oct. 2, it’s possible some of that heat was radiating from DC where brokers, regulators, exchanges, and institutional investors gathered just steps from the White House at the 2019 Security Traders Association (STA) Market Structure Conference. All fresh on the heels of brand-new SEC and industry committee proposals as well as big news from mega retail brokers.

Many subjects were covered over the course of the three-day conference, including Rule 606 amendments, unbundling, growing uses of AI, and Consolidated Audit Trail (CAT). However, five of the most talked about issues, both on and off stage were:

1. Race to Zero on Retail Commission Fees

  • The impact of zero commissions will be clearer over time, but it will come as no surprise if the end result for retail brokerages is consolidation.

2. New ETF Rules

  • Under the new rule, ETFs have the option of using custom baskets which may open doors for more actively-managed ETFs. This could drive fees lower.

3. Changes to the SIP

  • The Operating Committees of the SIPs (Securities Information Processors) announced a proposal for adding off lot quotes to the consolidated data feeds. These quotes would not be added to the NBBO nor would they be considered protected quotes.

4. Thinly Traded Stocks

  • Commission compression makes it harder for brokers to win mega-cap orders from institutional traders whose commission pools are shrinking. Regulators appear to be focused mainly on ‘Boiler Room’ issues.

5. SEC Proposal: NMS Plan Fee Changes

  • The SEC proposed that Exchanges be required to get approval when making changes to their market data fees, which comes as a response to complaints from marker participants on the escalating costs of market data and connectivity costs.

For an in-depth report of the most important topics at this year’s STA Market Structure Conference, please click here.

By Craig Viani, Head of US Market Structure

Harrison Short