The SEC’s market structure proposals present both challenges and opportunities, according to Anna Kurzrok, managing director of market structure at Jefferies.
Speaking on the Boxes and Lines – Sub-Penny for Your Thoughts? Jefferies’ Anna Kurzrok on the Future of Market Structure Reform, a market structure podcast with Ronan Ryan & John Ramsay of IEX, she said that the challenge is a very heavy, aggressive regulatory agenda.
The challenge is, whether needed or not, is the intersection of all of those proposals together, she said.
“Then, you add on, by not just looking at the ones that are proposed, but you’re also looking at the ones that are final, and are very important to everyone in the industry, like T+1 settlement or Reg SCI,” she said.
“When you couple that with a complete overhaul of trading, that connection is challenging for everybody just trying to figure out what should we do with what we have to do,” she said.
On the opportunities, Kurzrok said that she’s seeing a lot of innovation in the trading venue space, and innovation in terms of methods of execution.
“We’re seeing different ATS venues pop up with different methods of executing, periodic auctions and things like that. I think that is certainly an area of opportunity from the day to day trading side,” she said.
According to Kurzrok, at the end of 2022, there were over 20, close to 30 proposals, and in 2023 there were around 11 final proposals from the SEC.
When asked about the current access fee and rebate structure, she said, that the discussion today is very different from when the tick size and access fee went in, almost 20 years ago.
“We’re talking about access fees as a percentage of the tick size, and that’s very different from what the intention was back when it was first proposed,” she said.
“I don’t know what the right rate or tick size should be and what other characteristics ought to surround it to. I think there is room for perhaps smaller tick sizes in certain stocks, but I think where there is a pretty good amount of consensus for the industry is, we need more data, and so that’s where I think is the challenge,” she added.
“We just don’t have data, we have no way of knowing what sub penny tick size trading and half pennies or a lower access fee would look like in the current trading environment,” she added.
“The challenge when it comes to pilots is the amount of different views,” Kurzrok added.
