January 6, 2016
The SEC Equity Market Structure Advisory Committee is an important element of providing the SEC with a variety of views and the understanding of informed market participants. However, it is also, by its nature, subject to the vagaries and biases, planned or unplanned, of advisory committee members whose loyalties may be to their employers or principal institutions. Therefore, there should be at least a form of nominal compliance with the Federal Advisory Committee Act, and a recognition that, if not fully Special Governmental Employees (SGE's) for purposes of that act, Committee mmembers are still in a position of trust and ability to affect SEC regulatory policy and market structure and rules for private benefit. Therefore I recommend 1) That the SEC General Counsel or staff at least have a nominal discussion at the outset of meetings of conflict of interest issues and the need for disclosure of any direct or substantial conflict of interest by EMSAC members 2) The upon issuance of an agenda, with subjects for discussion by the Committee, that members fill out a simple form, name, employment, interests and organizations that might be affected by the subjects of the agenda items, so that the public and the Commission will be fully aware of the nature of the member's interest in the subjects to be discussed. The FDA has similar disclosure requirements for its advisory committees and workshops, where far less in dollar value may be a stake than the overall financial markets. You can contact Philip Bautista of the FDA to obtain their forms and disclosure requirements 3) There should be a log of public comments submitted to the Equity Structure Advisory Committee, based on the existing comments I have read, ranging from proposed random milli-second delays in liquidity removing orders (the first comment submitted to the committee) to removal of some Committee members based on firm behaviors or interests (the Better Markets comments) This would take the form of a 3 column chart A. Summary of comments B. Considered by Advisory Committee or not C. Action by Committee or SEC. adopt, reject, modify, consider further.
While recognizing that members of this Committee may not be fully Special Government Employees as that term is technically interpreted under the law, it remains clear from several factors-the number of comments submitted the request for inclusion of additional Committee members for other viewpoints the reliance of the Commission on the "expertise" of members as to the possibility or practicality of any forms of market structure or regulation the proposed used of subcommittees which would further remove any potential bias from review and the fundamental nature of the matters discussed, ie the form and level of regulation of securities markets and structure, that maximum disclosure of potential bias or conflict should be not just encouraged, but required. Indeed, if there are subcommittees, the time commitments and expanded roles of advisory committee members on such subcommittee work as well as full committee meetings and preparation urges full disclosure of roles and perspective.
Such disclosure requirements should not be burdensome, but would instill public confidence in the deliberations and results of this important Committee, and assure the SEC that it could rely on the Committees discussions and candor.