SEC Commissioner Stein discussed market structure issues in a recent speech. She provided an overview of the ways that technology and competition have changed trading, noting the proliferation of trading venues that now include (with the options markets) 16 registered exchanges, dozens of dark pools, and hundreds of broker-dealer intermediaries. She also touched on how trading volume has moved from the exchanges, commenting that by 2009, only 25% of trading volume for NYSE-listed stocks were executed on the exchange. In addition to the increasing number of available venues, Commissioner Stein also discussed changes to trading strategies, including the fact that front-running now happens in milliseconds.
Commissioner Stein expressed hesitation about how these changes may affect the equities markets. She stated, “[w]hile our capital markets have dramatically changed, we need to make sure that we do not lose sight of perhaps our most important and critical objectives: robust, fair, and efficient capital markets.” One of the challenges facing the SEC, according to Commissioner Stein, is the lack of easy access to the data necessary to understand events in the markets. She noted the need to develop the Consolidated Audit Trail with the assistance of market participants, saying that it is impossible to identify issues in the market without the data that the CAT would provide. She did not indicate a desire to rush to fix problems before they are clearly understood, however. She stated, “[a]s you may have guessed, I believe we should develop policy from the facts we should be gathering as much data as we can, and if we think an alternative approach should be considered, we should test and evaluate it.”