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Rising Rates and Vol Give Funds Food for Thought, but a Menu Overhaul Isn't Required

Due to a combination of pressure to deliver greater returns and a prolonged period of low rates, the investment world is experiencing a major shift requiring asset managers to rethink their strategies.

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January 2, 2014

SIFMA Seeks SIP Overhaul

By

Peter Chapman

The Securities Industry and Financial Markets Association wants a sweeping overhaul in the way the Securities Information Processors, or SIPs, operate.

In a November letter to the Securities and Exchange Commission, the broker-dealer lobbying group called the current operation governing the distribution of market data "outdated" and needing a revamp. The letter followed SEC demands that SIP operators establish plans of action in the event of malfunctions.

An outage in August of the Nasdaq-run SIP that halted trading in Nasdaq-listed securities prompted the SEC concern. SIFMA told the SEC that it was "imperative" that broker-dealers participate in the drafting of any plans and also petitioned the regulator to change the way the SIPs are governed and operate.

Currently, broker-dealers act only as advisors. SIFMA maintains that arrangement is ineffectual and that brokers and buysiders should become direct representatives at SIPs with voting power. In addition, SIFMA wants the SEC to require the SIPs to provide full financial disclosure, including tape revenue allocations, and to expand the number of industry players that can act as SIPs. Nasdaq and NYSE, operators of the SIPs, would not comment.


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