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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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May 31, 2004

Donaldson Calls for Safe Harbor Changes

By Gregory Bresiger

The soft dollar issue is very complex, says SEC Chairman William Donaldson. What's required is better disclosure and also a tightening of the 1975 Section 28(e) regulation that created soft dollars.

"There needs to be a refinement of 28(e) of what is research," Donaldson said at STA's annual Washington conference. He said that, since 1975, some firms have been straying from the original meaning of the rule.

"Some people are buying things that are not research related," Donaldson said.

At the same STA session, he also addressed the massive four-part Reg NMS proposal. Donaldson said that the commission expects to move on the plan "sooner rather than later." He also said that it is possible that the SEC may adopt the plan in a piecemeal fashion.

Most securities industry observers have said that the sub-penny trading part of Reg NMS probably could be quickly adopted without too much controversy. At the other end of the spectrum is the trade-through plan, with its controversial opt-out provision. It is a plan that is dividing the trading industry - the longtime players such as the Big Board against the newer players such as Instinet - and will likely cause controversy when the SEC tackles it.

Donaldson addressed the controversies that are before the industry when he said that, "you have the clash of the slow versus the fast markets." Later, in a brief answer to a question from Traders Magazine, Donaldson explained that the SEC has "certain ways" under the definition of 28(e) of "restricting soft dollars." In other areas of soft dollars, he added, Congressional authorization would be required for reform. However, Donaldson said the SEC would have to await the report of a special task force before it makes certain moves on soft dollars.