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Tim Quast
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April 1, 2003

The Lobbying Battleground

By Gregory Bresiger

Watch SEC Chairman William Donaldson's appointments, or his decision to leave things as they are. Appointments are always critical, but they take on an added importance at a time when the SEC finally appears ready to take action on market structure and other dicey issues such as fees and market accessibility. That's what several trading industry lobbyists told Traders Magazine.

Chief of Staff

"Is Donaldson going to appoint a special assistant on market structure? Who will be his chief of staff?" Those are some of the questions poised by lobbyists. Will these positions be filled by people who are friendly to the new electronic markets or will they be filled by those who have seemed to favor traditional markets?

A lobbyist for an electronic trading firm said there is no requirement that Donaldson have a special assistant on market structure, but that has happened in the past when big issues were before the commission. While the STA and Nasdaq are strongly making their case on various issues, the electronic trading operations are also making an opposing case.

"We are going to talk to commissioners, to members of Congress and will try seminars. Anything and everything," said one lobbyist.

Lobbyists of ECNs have consistently argued that most of the SEC staff tilts in favor of traditional markets and market makers. ECN officials have also complained that the SEC is against them. Therefore, several lobbyists contended that Annette Nazareth, the longtime director of the Division of Market Regulation, is one of the most important players in the market structure debate.

"We're watching if anything happens with her and with her deputy," said one lobbyist with an ECN. Another key issue: Will Donaldson, as many other chairmen who faced unique problems, appoint a special assistant on market structure?

Political Posts

An SEC spokesman said that a relatively small percentage - about 10 percent - of the SEC staff are political appointments. That means they could be removed if Donaldson, with the support of President Bush, asks for a resignation. "As of today, Chairman Donaldson has made no staff changes," the spokesman said.