It would be wonderful if our markets worked flawlessly without intervention, but that's just not the way it is. We need smart regulation to maintain stability and transparency, to weed out bad actors, and to instill investors with confidence.
That's where U.S. regulators come in, and they have a tough job to do. In order to enhance market quality, they've recently started a dialogue on new technical "pilot programs," including changing how exchanges charge customers to trade in their markets ("maker/taker pricing"), and the process by which brokers execute their customer orders in order to arrive at a best price ("trade-at"). Some industry participants would benefit from these pilots, and others would be adversely impacted. While I applaud regulation that seeks to enhance market quality, we should avoid adding layers of technical complexity through potentially risky experiments, and picking winners and losers in the process.
However, regulators have made other moves as of late that all of Wall Street can, and should, rally around. Last year, for instance, U.S. regulators proposed an important and enlightened regulation, Reg SCI, which would create standards and rules for the technology that drives HFT and other aspects of the modern marketplace. In October, the SEC also launched MIDAS, a public website that publishes trading data, which had been previously hard to access without expensive and sophisticated technology. Together, these efforts will bolster market stability, transparency, and investor confidence.