Delta Strategy Group ("DSG") summarized industry member and regulator comments made at a recent Equity Market Structure Advisory Committee ("EMSAC") meeting. The meeting was held to review recommendations proposed by the subcommittees on Market Quality and Customer Issues, and to consider subcommittee status reports on Regulation NMS and trading venues.
The Market Quality subcommittee proposed recommendations focused on three topics: (i) the modification of the current limit up/limit down regime, (ii) market-wide circuit breakers, and (iii) market opening procedures.
According to the DSG summary, testimony included the following:
- Georgetown University School of Business Assistant Professor James Angel warned that market-wide circuit breakers are dangerously defective – if a market is under stress, the last thing it needs is more stress. He said that the trigger should be based on the open price – there should be close coordination with the derivatives markets, and a rethinking of the re-opening process.
- NYSE COO Stacey Cunningham argued that the SEC should not emphasize markets opening as close to 9:30 a.m. as a market objective – issuers should choose what issues matter most to them.
- Virtu Financial Senior V.P. Venu Palaparthi asserted that trading halts are disruptive to the price discovery process.
- MarketWatch NASDAQ Senior V.P. John Zecca stated that NASDAQ is disappointed in the lack of improvements for small and mid-size companies. He also argued that a one-size-fits-all market structure is not recommended.
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