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.

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March 1, 2001

Now or Never:

By Gregory Bresiger

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  • Now or Never:

It's now or never for the trading industry in the 107th Congress. Never have the

Security Traders Association's chances seemed so bright to obtain favored tax-reduction legislation of Section 31(a) fees. Still, if the industry isn't able to take advantage of this unique opportunity over the next two years, it will be a long time before it has another one, STA officials concede.

"This [Bush] administration is much more sympathetic than the previous one. This is the year to get things done," said Lee Korins, president of the STA. That's what STA officials and securities industry lobbyists tell Traders Magazine in a series of interviews about the new Congressional session and about their attempts to reduce the unpopular Section 31(a) tax, which is the STA's top priority in the current two-year session of Congress.

The STA, which has failed numerous times over the past four years in its attempts to pass legislation to reduce Section 31(a) fees, now has a new chief lobbyist and believes it will be more successful this time than in the last two Congresses. That's because more lawmakers now understand the issue, they say. STA officials note that this new Congress is under Republican control, even though they concede the control is tenuous. Congress will negotiate with the first Republican administration in eight years, an administration that has indicated it is interested in Section 31(a) reductions.

These circumstances will give the STA and the rest of the securities industry a unique opportunity to make a successful case for tax reduction, industry officials contend. Legislation with significant bi-partisan sponsorship is pending. It would provide the tax reduction that the trading industry wants.

"I believe we have a very good chance. I would say our chances are about 70 percent this time," according to Arthur Pacheco, a senior managing director with Bear Stearns and the new chairman of the STA's Political Action Committee (STAPAC). The STA has said the same thing several times over the previous two sessions of Congress. In the last session, it was only able to move Section 31(a) tax reductions through two Congressional committees, although neither measure ever made it to the floor of the Senate or the House of Representatives.

Pacheco implicitly acknowledges STA's previous failures. "It's been difficult to do this in the past, but I think we can do it this time," he added. Others in the securities industry agree.

Favored Legislation

The STA's favored legislation is Senate Bill 143. It is "a bill to amend the Securities Act of 1933 and the Securities Exchange Act of 1934, to reduce securities fees in excess of those required to fund operations of the Securities and Exchange Commission," according to the legislation.

"I don't want to make odds on this," added another securities official. "After all, look at how many people were wrong about the Super Bowl, but I do think we have the best chance ever to do it this time," said Dan Michaelis, a spokes-

man for the Securities Industry Association, which is another securities group lobbying for the tax cut.