Privately, current and former SEC officials say they’ve never seen anything like it.
Wall Street
Case in point: In June, NYSE and Nasdaq alleged Brett Redfearn, the director of the SEC’s trading and markets division, had “improperly influenced” commission proceedings on market data because of his Wall Street background. Before joining the regulator in late 2017, Redfearn was global head of market structure for JPMorgan Chase & Co.’s corporate and investment bank, as well as chairman of SIFMA’s equity markets and trading committee. The SEC’s process was “tainted” by Redfearn’s involvement, the two exchanges said in a legal filing.
Targeting Redfearn was a step too far, said several industry executives. They praised Redfearn for his intelligence and knowledge of equity-market structure.
“Brett has done and continues to do important work on behalf of investors and our markets,” SEC spokesman John Nester said in a statement. “His participation in this matter has been thoroughly vetted and deemed permissible by our ethics office.”
New Exchanges
The infighting has created an opening for new marketplaces, such as Long-Term Stock Exchange, a Silicon Valley startup that won approval from the SEC in May to open a new trading venue. IEX Group Inc. is a regular critic of the legacy players. It supports the SEC pilot and doesn’t offer rebates or charge for market data. And some of the biggest U.S. market makers, including Bank of America Corp., Citadel Securities, E*Trade Financial Corp. and Virtu Financial Inc., formed their own Members Exchange earlier this year.
The situation has become even more tense as participants come under pressure to cut costs at a time when profits from equity trading are shrinking.
“Every fee you charge is a nickel out of my pocket, and the revenue is not enough to float all the boats -- all the boats are starting to attack each other,” said Larry Tabb, founder of research firm Tabb Group LLC. “This is worse than I’ve ever seen it. I’ve been in the industry since the 1980s. I’ve never seen this level of acrimony.”
This article provided by Bloomberg News.