John D'Antona Jr.
Traders Magazine Online News

CEO CHAT: Tina Byles Williams, FIS Group

Investment veteran is on the lookout for talented, lesser known managers in frontier and emerging markets.

Traders Poll

Are you concerned about foreign ownership of a U.S. stock exchange?

Free Site Registration

August 31, 2001

Political Power Broker

By John A. Byrne Editorr

There are signs the flow of cash into equity mutual funds that drove stock trading volume through most of the 1990s is slowing down. Money-market funds added a net $28.75 billion, during a one-week period in August, pushing total assets to $2.081 trillion. That's small in comparison to total stock mutual fund assets but it may be an ominous sign. At the same time, the latest round of SEC re-engineering is driving dealers inexorably towards a more full-blown agency market.

Still, the confluence of these events may propel STA members to become more active in the SEC rule-making process. For if members do not become more active, the end may be in sight for some traders. This is not an irrational fear. It is both the tinker's curse and the blessing contained in Section 11A in the amended Securities Exchange Act of 1934, and it is an objective of modern securities regulation: The opportunity for investors, consistent with other market goals, to execute orders without dealer intermediation.

That said, the STA, as a voice of the trading community, must be clear about its own goals. And that's a complicated matter. For starters, the STA must reconcile what appear to be irreconcilable opposites - the wishes of the buyside and of the sellside and the various constituencies within each group. And it must obviously not confine its mandate to a narrow parochial interest. To that end, the STA should become the sponsor of an extraordinary meeting of industry power brokers - from the New York Stock Exchange to the Archipelago ECN, from the thinning ranks of the OTC desks to the executive suites of the major block-trading houses. These leaders would eventually emerge with a sort of Magna Carta of the trading world. That Magna Carta, legally binding on each party, could hold tremendous sway in the chambers of the SEC. It could force a re-examination of the increasingly outdated National Market System enacted by Congress in 1975. Sure, the SEC has had its own share of soul-searching, including its Market 2000 Study. But this convocation would be different - an industry-inspired, free-market endeavor of the future.

The next step: The STA needs millions of dollars (this is not a typo) in annual contributions to represent the trading community in more than a superficial way. At its current level, it is impossible to effectively lobby the lawmakers. With more money, the STA could hire hotshot attorneys from the departing ranks of the SEC, ratchet up its efforts in Washington, buy television and radio spots during Congressional elections, and cultivate productive relationships with consumer advocates and the academic elite. The moment is perfect. The broad self-interest of traders, on both sides of the aisles, is under attack. The chairman-elect of the STA, Michael Bird, who recognizes the need for more money in the treasury, says so in this month's Cover Story. The STA, he said, can use the current angst among traders as a source of energy to motivate them. So let the motivating begin.