As the leading advocate on behalf of the options industry, our Company maintains a prominent and visible presence in Washington, D.C. Over the last two years, our Company’s executives spent more time on Capitol Hill than at any time in our history. Our Company’s highly respected profile within the financial industry made us the trusted “go-to” options resource for policy makers.
For the financial industry, the watershed moment of the year occurred on July 21 as President Obama signed the Wall Street Reform and Consumer Protection Act, a massive bill that aims to curb systemic risk to the financial system. We worked in close consultation with all levels of the legislative branch as the framework for the bill was finalized during the year, and items that our Company believed were critical to the options industry were ultimately included in the final bill.
In addition to its rule-writing obligations mandated in the financial regulatory reform bill, the Securities and Exchange Commission (SEC) has begun a review of numerous equity market structure issues, including step-up or flash trading, fee caps, dark pools, high frequency trading and co-location. While none of these issues caused the 2008 financial crisis, they became highly politicized in its wake.
Our dialogue with the Commission varies from issue to issue, but we have consistently conveyed the same over-arching messages pertaining to market structure debate: one, that the options markets are different, and “one-size-fits-all” stock market solutions cannot easily be grafted onto the options markets; two, when determining policy, regulators must be mindful of the effects of unintended consequences when making changes to delicate market mechanisms; and three, that regulators need to support their rulemaking with empirical evidence and data.
We have been—and will remain—in close dialogue with both sides of the political aisle about how the new rules may potentially affect the U.S. options business and its growing customer base. Our Company is working to ensure that options markets are treated on their own merit, with policy that will bolster the unique strengths and characteristics of the options industry.