Yesterday, the House Committee on Financial Services discussed equity market structure (basically how stock markets allow trades on their platforms). Brokers weren’t happy, Marketwatch reports. Jeff Brown, a senior vice president of Charles Swab noted yesterday in his testimony:
“rather than improving the technology that improves the usefulness and supports the distribution of the consolidated market data to all market participants, the exchanges prioritize enhancements to their own market data offerings at ever-increasing fees, said Brown.
This process, Brown told the hearing, “has resulted in conflicts of interest that are obvious.” The exchanges are implementing policies “that are designed to benefit the exchanges’ business interests or mitigate their regulatory obligations at the expense of broker-dealers.”
These complaints are not new, and I’ve written a good deal about it–and the fact that brokers themselves have gamed the system in ways framers of the 33 and 34 Acts would have never imagined.
Some of the reforms suggested include improving regulation of data feeds and order routing disclosure. But there is also something much larger in the making–an overhaul of the self regulatory nature of the major exchanges, and presumably more government oversight. It’s a curious position not so subtly forwarded by some of Wall Street’s biggest advocates.