Equity Market Structure Principles
Markets and investors would benefit from greater clarity and insight into order matching,venue services, and broker order routing practices. We support improved public transparency into all operational aspects of trading venues, including exchanges, alternative trading systems (ATSs) and dark pools.
Reducing regulatory incentives for market fragmentation
Regulatory policy, including Reg NMS, has subsidized the existence of more trading venues than would survive under normal competitive dynamics. Excess fragmentation in equity markets increases complexity and costs for market participants. We propose to address this in a variety of ways, including by changing the pay-out formulas for the Securities Information Processors (SIP). We also encourage the SEC to review the concept of protected quotes under Reg NMS.
Increasing Understanding of Consolidated Market Data
We support transparency and education for investors into the SIP’s role in the marketplace, as well as all commercial aspects of the SIP. We support transparency into the latency of consolidated feeds and efforts to increase confidence in the consolidated feed data. We support exchange level rule changes that disclose how data feeds are being utilized.
Improving the Current Consolidated Feed Structure
We can improve the efficiency of the current consolidated feed structure by introducing competition for the SIPs,enhancing incentives for competitive feeds, and improving the performance of the SIPs.
Promoting Fair Access to Markets
Technology has democratized market access, and we believe this should be preserved and protected. To ensure fair access to markets, we support exchange oversight of co-location and related connectivity services to ensure non-discriminatory terms and transparency to the public.
Enhancing the Regulatory Process
Industry participation is critical to successfully addressing the complexities of market structure reform. We urge the SEC to create a Market Structure Advisory Committee to facilitate dialogue and encourage industry engagement. We also support the use of empirical data in all aspects of policy making, and where appropriate, thoughtful, well-structured pilot programs to gather data on potential regulatory changes.