Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

Traders Poll

Are you in favor of a pilot program and examination of the rebate system by the SEC?




Free Site Registration

February 1, 1999

Trade Groups Oil Section 31 Political Machines:The Big Question: Will the SIA Take a More Active

By Jeffrey L. Winograd

The Securities Industries Association is likely to take a more active part later this year, on the side of Nasdaq market makers and exchange specialists, in the drawn-out battle for cuts in Section 31 equity-transaction fees, according to an industry source.

While traders are disappointed with the last Congress for not introducing fee-reduction legislation despite massive lobbying by the Security Traders Association and a coalition of other groups a renewed effort with the SIA is expected to pull out the stops.

As that effort takes shape, it is not clear how the STA, the strongest fee-cut advocate, will assert itself in the new campaign.

But the SIA will likely have a more prominent role. "The SIA has a tremendous amount of clout and the financial resources to help lobby," the industry source said.

Not Public

The SIA and the STA have not made their plans public, but an SIA spokesman did acknowledge that the association will be "one of the leading [fee-cut] advocates."

"Clearly the SEC needs to be adequately funded," added SIA spokesman James Spellman, referring to the main purpose of the fees. "But fees were not intended to subsidize other areas of the budget." The fees, in fact, generate so much that a substantial part of the revenue is not needed for the SEC budget.

For its part, the STA said an official announcement may be made ahead of the STA's annual congressional conference on March 24 in Washington. A meeting of STA and other fee-reduction advocates was held in Washington last month to help the campaign.

With Lee Korins assuming the top position at the STA, following the departure of John Tognino to an executive post at the National Association of Securities Dealers, the STA posture on Section 31 could change. But Korins is said to be sympathetic to fee cuts.

How Korins and the STA leadership handle the issue will become more clear when the STA convenes its congressional conference in Washington.

Meanwhile, there is an encouraging sign from Sen. Phil Gramm (R-Texas), the new chairman of the Senate Banking, Housing and Urban Affairs Committee.

In his first press conference as panel chairman, Gramm expressed dissatisfaction about the formula used for calculating Section 31 fees and the related registration fees on new stock issues.

"It's one of those things that sticks in his craw," a Gramm staff member told Traders Magazine. In an interview last year, Gramm described Section 31 fees as "a tax on capital."