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Elaine Wah

Modern Markets, Modern Metrics - A Blog By IEX

In this blog by IEX's Elaine Wah, the newest public exchange looks to refute public claims that the metrics it uses are designed to inflate its own volume numbers and mislead people.

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February 1, 1999

Bradley Suggests Buyside Withdraw From the STA: He Says STA Only Represents Sellside

By Michael L. O'Reilly

A prominent member of the Security Traders Association Institutional Committee has lashed out at the STA, claiming it does not represent the buy-side community.

In a blistering attack, Harold Bradley, a portfolio manager at American Century Investment Management in Kansas City, said the STA's agenda reflects only its sell-side members.

Bradley added that the organization's buy-side members should consider splintering from the STA and forming a new representative organization.

"The buyside should think about dropping from the STA," said veteran STA member Bradley, during a telephone interview for a separate story. "We can't get our ideas through. The STA is a sell-side organization."

The STA Institutional Committee is a 20-member panel of STA buy-side members, formed to foster an institutional agenda within the STA.

Other Critics

Two other noted members of the STA Institutional Committee echoed some of Bradley's criticism of the STA.

"The STA has been good about listening to what we have to say," said Holly Stark, head trader at Dalton, Greiner, Hartman, Maher & Co. in New York, and the current chairman of the STA Institutional Committee. "But we haven't really influenced policy. We need a platform that can focus more on the buyside."

Stark was reluctant to advocate the founding of a separate buy-side organization. She noted that cost and time pressures would likely prohibit many buy-side traders from forming such an organization.

Peter Jenkins, head equity trader at Scudder Kemper Investments in New York, said that in his past tenure as chairman of the STA Institutional Committee, the STA board of governors never came to his committee to solicit opinions in shaping agenda.

"This is a strong committee," Jenkins added. "We represent 20 major institutions, and it's easy to get a feel for what's going on. But the STA doesn't depend on our input when they make decisions."

Jenkins did acknowledge the presence of buy-side trader Stephen O'Neil as an STA officer, and two buy-side members of the STA's 12-person board of governors Andrew M. Brooks and Mary McDermott-Holland.

"We get some representation, and they voice our opinions," Jenkins said, "but we haven't really shaped policy."

Both Jenkins and Stark, for example, cited the STA's recent battle to eliminate the Securities and Exchange Commission's Section 31 transaction fees. The STA has centered its recent agenda on the reduction of the controversial fees, an issue strongly supported by sell-side traders. Jenkins and Stark said the fees have little relevance to the buyside.

Chairman Responds

STA Chairman Art Kearney, for his part, said the organization has made efforts to tackle buy-side issues. But he said most buy-side firms do not support the participation of their traders in the STA. Kearney cited the attendance of only 15 buy-side traders at the STA's annual convention last October in Boca Raton.

The STA is 7,500-member trade organization representing mostly market makers and broker dealers. The STA said between 350 and 400 of its members represent buy-side firms.