SEC Commissioner Kara Stein has no qualms dissecting the role data plays in today’s financial markets. If anything, she seems to be making it her mission to educate anyone who will listen about the conflicting roles data can play in today’s markets: Data can empower beautiful market efficiencies and enhance beastly market disruptions.

“Data revolution represents dramatic changes in securities markets operations,” Stein said Tuesday at SIFMA’s 42nd Annual Operations Conference in San Diego.

Before outlining the data-related initiatives she deems crucial, Stein offered a brief history of the markets, detailing the evolution of market data from the days of the Buttonwood tree to today’s high-frequency trading superhighways. Ultimately, Stein urged caution about the ramifications of analysis and regulation not keeping pace with microwave- and laser-fast markets, noting “The Flash Crash demonstrated that markets had outpaced their keepers.”

Speaking in the shadow of Petco Park, the home of baseball’s San Diego Padres, Stein seemed to touch all the bases in discussing the hottest data-related topics in the operations and technology space:

Legal Entity Identifiers

Stein is a proponent of widespread adoption of Legal Entity Identifiers. (read more…)

A collection of stories from SmartBrief publications and around the web…

JPMorgan software identifies potentially rogue workers: Bloomberg reports on a Reagan-esque initiative at JPMorgan to “trust, but verify” the actions of its employees. Sally Dewar, JPMorgan Chase’s head of regulatory affairs for Europe, is overseeing an algorithmic program that identifies employees who might go rogue. The software considers dozens of factors, including whether an employee violates trading rules or fails to attend compliance classes. “It’s very difficult for a business head to take what could be hundreds of data points and start to draw any themes about a particular desk or trader,” Dewar said. “The idea is to refine those data points to help predict patterns of behavior.”

Treasury Market Practices Group says HFT might be no bueno for Treasurys: High-frequency and other types of automated trading have increased risk to trading Treasurys, according to the Treasury Market Practices Group, which is sponsored by the Federal Reserve Bank of New York. (read more…)

SmartBrief will be traveling to San Diego next week to cover SIFMA OPS 2015. In advance of the event, we asked Tom Price, Managing Director, Operations, Technology and BCP for SIFMA to tell us more about what we can expect.

For 42 years, SIFMA’s annual Operations Conference & Exhibition has gathered broker-dealers and asset managers to discuss the evolution of operations and regulation in the industry.

As over 800 industry professionals convene in San Diego next week, a multitude of reforms and initiatives are either in progress, under review, or pending approval of a new rule. OPS 2015 will provide valuable information on what to expect in the year ahead, and the tools that are available to firms to prepare for the changing operational landscape and to manage operational risk.

This is a content-driven event with a packed program. I’ll be hosting an in-depth breakout session on how the Consolidated Audit Trail (CAT) is fundamentally changing reporting requirements. (read more…)

Tesla founder and CEO Elon Musk took to Twitter last week to share the following news:


That tweet sent Tesla’s share price up, ultimately adding about $1 billion to the firm’s market capitalization. That is great news for Tesla and fans of the company’s cars, but it may cause some headaches for Tesla’s compliance department because Musk’s tweet might have violated guidance from the Securities and Exchange Commission on the use of social media.

Let’s review the problems Musk’s tweet might present and then look at some of the easy ways this compliance risk could have been avoided.

Guidance from the SEC states:

“Although every case must be evaluated on its own facts, disclosure of material, nonpublic information on the personal social media site of an individual corporate officer — without advance notice to investors that the site may be used for this purpose — is unlikely to qualify as an acceptable method of disclosure under the securities laws. (read more…)

A collection of stories from SmartBrief publications and around the web…

Not really “One Shining Moment” for financial regulators: As the college basketball world heads into Final Four weekend, I can’t help but think of the NCAA when reading the latest tales of dysfunction at HSBC. While the NCAA enforcement division has a track record ranging from incompetent to inconsistent, even it would have know what to do with HSBC by now. If a college president or athletic director went before the NCAA and admitted that rules were “cast-iron certain” to be broken in the future because the institution is simply too big to manage, that school would be slapped with the NCAA’s infamous “lack of institutional control” designation and perhaps given an SMU-style death penalty. As for financial regulators and their “oversight” of HSBC, it seems they aren’t as strong as the always flimsy NCAA.

Michael Lewis reflects on what was missed in the public reaction to “Flash Boys”: Lewis takes a measured approach and makes a number of fair points, including this one that likely makes banks and exchanges cringe. (read more…)