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

July 31, 1999

What Are U.S. Presidential Candidates Promising? Here's the Problem: You Can't Tell the Players W

By William Hoffman

It's not too early to start thinking about next year's presidential campaign and the baker's dozen of contending candidates. If you believe the inside-the-Beltway pundits, however, it may already be too late to start thinking.

Commentators as far away as London are wondering if the race isn't "All Sewn Up?", as The Economist magazine headlined a recent issue. Sen. Orrin Hatch (R-Utah) entered the GOP contest in July in case putative nominee Texas Gov. George W. Bush fumbles in the primaries.

Sen. Bob Kerrey (D-Neb.) endorsed former Sen. Bill Bradley so Vice President Al Gore will have a challenger for the Democrat nomination so many assume is his to lose.

Yet few candidates have staked out detailed positions on Social Security, taxes, bank deregulation and private savings initiatives that representatives of traders, broker dealers and their customers identify as important.

Not one of the four major candidates' campaign organizations (representing Bush, Gore, Bradley, and former Transportation and Labor Secretary Elizabeth Dole) could elaborate specific stands on securities industry issues.

The only exception, coming from the Republican camp, was a vague assertion that the GOP favors freer markets and lower taxes.

Five-Question Survey

Most of the campaign organizations contacted said they would participate in a five-question Traders Magazine survey to be published in a future issue. However, none would commit to a timetable for answers.

The campaigns' dearth of focus and specifics isn't surprising, given that, according to the Pew Research Center for the People and the Press, only 13 percent of Americans are now paying attention to the presidential race. But the securities industry seems as apathetic as the rest of the country.

"As an industry, I think we're not as astute as some industries in [courting] Washington," said Lee Korins, president and chief executive of the Security Traders Association. "I think the banking industry is much more attuned to Washington, [and] gets much more accomplished on their behalf than the trading industry does."

The STA does plan to ratchet up its fund-raising activities for its political action committee, Korins added. "We're pretty small in terms of overall political actions committees." He declined, as did others, to disclose how much money the group has available to distribute.

The Securities Industry Association has no plans to increase its fund-raising for presidential campaign contributions, said Dan Michaelis, assistant vice president for corporate communications at the SIA in Washington. Other industry groups were similarly uninformative about their giving plans.

But the industry is well-represented in campaign finance filings, according to the Federal Election Commission (FEC). Of the $709 billion in lobbying cash spread around state and federal governments during the last period for which figures were available (July 31 through Dec. 31, 1998), "finance, [and] insurance" groups gave more than $88 million, behind only "communication, [and] technology" and "health care," according to the FEC.

The Center for Responsive Politics, a campaign finance watchdog group in Washington, documented $17.8 million in donations by securities industry interests during the 1996 federal races, (61 percent of which went to the GOP), making it the largest industry contributor tracked excepting the real estate sector.

Investment banking giant Merrill Lynch & Co. was the seventh largest campaign contributor (for presidential and congressional campaigns) in 1996, according to CRP figures. Goldman Sachs ranked 11th and Morgan Stanley & Co. came in 17th.

Practical Reason

Securities industry advocates say there's a practical reason for their watch-and-wait attitude on the 2000 presidential campaign

"The more effective way to use a PAC is to be in Washington every year," Korins said. "Be a consistent contributor to the fund-raising efforts of congressmen and senators who are in agreement with what you agree with."

Bob Seijas, co-president of the Specialist Association in New York City, concurred.

The specialists make a point of visiting and touring the New York Stock Exchange with elected federal officials, to build understanding relationships that may be helpful later on, he said.

"There's never any pressure," Seijas said. "But it's always a good thing to do."