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SEC's Clayton Breaks From Tradition

Traders Magazine Online News, August 23, 2017

John D'Antona Jr.

Outward appearances can be deceiving.

And the times, could they be changing?

Just a few weeks ago, the new Chairman of the Securities and Exchange Commission Jay Clayton made his first public speech at the Economic Club of New York. While a Chairman’s prepared remarks are often made available to the press and public by the SEC leaving little to the imagination, his July 12th speech was markedly different.

Clayton broke from his speech several times, making several “off-the-cuff” remarks. That is, he actually gave his opinion on some of his eight principles he outlined would be the focus of the Commission under his leadership. One of the more notable musings was that he suggested that an access fee pilot, more colloquially referred to as “maker-taker” proposal was likely in coming months. According to several people who spoke with Traders Magazine and were at the speech reported Clayton went off script several times, most notably when he was talking about the maker-taker pilot. Clayton’s thoughts ranged from the validity of doing a pilot to making a statement to the effect that ‘liquidity is not free.’

What? Breaking from script? There must be some mistake.

No.

Clayton broke from tradition, perhaps due to the need to be more transparent to Joe Q Public, or the buy-side, or even to Congress and the industry. He spoke freely and openly. And despite early market trepidation, Clayton sounded at times like a trader himself. This is not to say other Chairmen were unknowledgeable or transparent or cared less for the industry – but perhaps new times require a new approach to the 21st century equity market and Clayton wanted to be new.

One attendee said that one could see Clayton’s facial expressions indicated he was really thoughtful about what he was saying and that he spoke in complete trains of thought – not just random musings.

Another point of note from the speech was that the Chairman took and answered questions posed to him. While this unique occurrence wouldn’t be classified as a Q&A session, Clayton did accept the questions and provided answers.

For the entire speech, please click here

Things that make one go, hmmm.

One market structure analyst who spoke on condition of anonymity since his firm didn’t want to be publicly quoted on the SEC or Clayton, did tell Traders Magazine that they were “very pleased” with his first public speech, “especially when it came to his willingness to take questions.”

Bill Harts

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