Courtesy of Pam Martens.
New York Stock Exhange
At 9:30 a.m. this morning, the Senate Subcommittee on Securities, Insurance and Investment will hold a hearing on stock market structure, titled: “Computerized Trading Venues: What Should the Rules of the Road Be?”
One of the individuals testifying will be Dan Mathisson, head of U.S. Equity Trading for Credit Suisse. Mathisson is an influential voice, writing a column for Traders Magazine and cited by Advanced Trading magazine for creating the modern algorithmic trading desk.
According to his prepared written testimony, Mathisson plans to give the Senators an earful on why stock exchanges should be stripped of their status as SROs – Self Regulatory Organizations. Credit Suisse, for whom Mathisson works, is subject to regulation by the SROs, as are all other broker dealers who are members of exchanges, such as JPMorgan Chase, Citigroup, Morgan Stanley, Merrill Lynch, etc.
Increasingly, the broker dealers see themselves in competition with the exchanges. Some of the broker dealers are engaging in stealth exchange-like activities called “internalization” where they match their customers buy and sell orders, functioning like an exchange but without transparency or regulation.
Mathisson doesn’t see nontransparent trading by big, serially fined and disciplined broker dealers as the problem – the problem is unfair competition from stock exchanges. Matthison says in his testimony:
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