Principal Traders Group released the following statement today regarding the Securities and Exchange Commission’s Reg SCI proposal.
FIA PTG today submitted a comment letter in response to the SEC’s request for comment on its proposed Reg SCI. As we discuss in the letter, we are committed to improving the resiliency of the U.S. equity markets. Our members depend on the maintenance of stable and orderly markets, and any disruptions caused by glitches, flaws, outages and other incidents are severely detrimental to our businesses. We also fully agree with the SEC that the proposed regulation would be an important step forward in the SEC’s oversight of the U.S. equity markets. We commend the SEC for launching this initiative and encourage the agency to make this a high priority.
FIA PTG strongly supports several specific provisions in the SEC proposal. In particular, we strongly support the proposal to improve standards for stability and integrity of exchange systems and market infrastructure. We especially support the development of standards for testing of exchange systems. A market-wide standard for testing would contribute significantly to greater stability and resiliency.
In our comment letter FIA PTG makes several recommendations on how the SEC’s goals in Reg SCI could be achieved in a more cost-effective way. Specifically, FIA PTG believes that the SEC should leverage the built-in redundancy of the current equity market structure. This approach would avoid the additional cost and complexity of requiring each exchange and significant ATS to establish and maintain its own individual back-up facility.
FIA PTG also supports the SEC proposal to require better dissemination of market disruptions and other incidents. Requiring trading venues to disclose serious flaws or material interruptions in market functions not only will help individual market participants manage their risks but more importantly it will help the entire marketplace learn and adapt.