Sexy and Seventeen! (New SEC Equity Market Structure Advisory Committee)


Hey man – I don’t feel like goin’ to school no more. They can’t make you go!

Proving that Michael Lewis’s book, Flash Boys, has affected the discussion around our equity market structure more than any other variable over the last decade, this morning we highlight for you the newly-formed SEC Equity Market Structure Advisory Committee. You may recall that recently word leaked that Noble prize winning economist Joel Stiglitz was nixed from this panel for “faulting high speed traders.” Other notable market structure critics were also not chosen for this panel; however the panel has a diverse makeup regardless:


Members of the Equity Market Structure Advisory Committee are:

Matthew Andresen, Co-Chief Executive Officer, Headlands Technologies LLC

Reginald Browne, Senior Managing Director & Global Co-Head, ETF Group, Cantor Fitzgerald & Co.

Kevin Cronin, Global Head of Trading, Invesco Ltd.

Brad Katsuyama, President and CEO, IEX Group Inc.

Ted Kaufman, Professor, Duke University Law School and former U.S. Senator from Delaware

Richard Ketchum, Chairman and CEO, FINRA

Manisha Kimmel, Managing Director, Financial Information Forum

Mehmet Kinak, Vice President and Head of Global Equity Market Structure and Electronic Trading, T.Rowe Price Group

Andrew Lo, Charles E. and Susan T. Harris Professor of Finance and Director, Laboratory for Financial Engineering, MIT Sloan School of Management and Chairman and Chief Investment Strategist, AlphaSimplex Group

Joseph Mecane, Managing Director, Barclays PLC

Jamil Nazarali, Senior Managing Director & Head of Execution Services, Citadel Securities

Eric Noll, President & CEO, Convergex Group

Maureen O’Hara, Robert W. Purcell Professor of Finance, Johnson Graduate School of Management, Cornell University and Chairman of the Board, Investment Technology Group Inc.

Joe Ratterman, CEO, BATS Global Markets Inc.

Nancy Smith, Corporate Secretary & Chief Integration Officer, AARP

Chester Spatt, Kenneth B. and Pamela R. Dunn Professor of Finance, Tepper School of Business, Carnegie Mellon University and Director of its Center for Financial Markets

Gary Stone, Chief Strategy Officer, Bloomberg Tradebook LLC


The Committee is large – comprising a whopping seventeen members! To be sure the panel has many of Wall Street’s and Washington’s brightest minds: it includes FINRA’s Richard Ketchum, IEX’s Brad Katsuyama, Former Senator Ted Kaufman, Invesco’s Kevin Cronin, T.Rowe’s Met Kinak, and Bloomberg’s Gary Stone. The Committee also includes some notable professors from academia, as well as some of the names that tend to be regulars on these kinds of panels. Finally the committee also includes some notable financial engineers – AlphaSimplex’s Andrew Lo and “Mr. ETF” – Reggie Brown.

While we are pleased with the diversity and mix of this SEC advisory panel, we want to make just a few points this morning.

1)      The panel has one representative from the stock exchanges – BATS’s Joe Ratterman. It is odd to us that there is no representative from either of the two primary listing exchanges (NYSE & NASDAQ).

2)      The panel includes a representative from one bulge firm – Barclays, which is odd to us as well; couldn’t a representative could have been chosen from the thoughtful Morgan Stanley team of market structure experts, who have been critics of conflicts of interest in order routing  and complex order types dating back to the financial crisis?

3)      There is no representative from any of the retail brokers, despite the SEC’s stated 2015 goal of focusing on protecting retail investors even more.

4)      There is no representative from any of the public corporations whose stocks are traded in the equity markets. We have made the point before that often this group is the “forgotten voice.”


We leave you with one additional final thought. What is this committee going to be charged with accomplishing? What is the optimal size of such a group (tasked with a highly important role and workload)? Several years ago Themis’s own Joe Saluzzi was on a working group at the CFTC assigned to define HFT; that group had seven members, and coordinating and reaching consensus in that group was… challenging. There actually are folks who study optimal working committee sizes; researchers at Wharton often suggest groups be limited to five or six members. Amazon’s Jeff Bezos has a “two pizza rule”: a committee should be no larger than a group that can consume two pizza pies.

This group has seventeen members. The members are certainly sexy, and we wish them great luck as they aid the SEC in formulating a pathway towards a future common-sense market structure. They may need that luck.