The U.S. Securities and Exchange Commission is convening a group of financial industry veterans for the first time next month to consider stock market reforms, but one group will be conspicuously absent: retail brokerages.

The SEC’s 17-member Market Structure Advisory Committee includes representatives of fund companies, an exchange, off-exchange trading venues, dealers, and academia, among others. The group, which meets four times a year, will review old rules, and advise the SEC on a range of new regulations designed to make sure the market is as stable and fair as possible.

Still, given that the SEC has said its main priority is to protect retail investors, the omission of retail brokers raises questions, because without their point of view the panel may recommend changes that favor institutional investors, analysts said. Retail investors place around 16 percent of all U.S. stock orders.

“There’s a missing gap of protecting retail order flow,” said Larry Tabb, chief executive of capital markets advisory firm TABB Group.

That gap was also noticed by committee member Joseph Ratterman, chairman of No. 2 U.S. exchange operator BATS Global Markets. He said he mentioned his concern to SEC Chair Mary Jo White shortly after the committee was announced and that she was supportive of him, along with committee member Jamil Nazarali, from market making firm Citadel Securities, formally representing retail interests.

To continue reading this article from Reuters, click here.

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The Securities and Exchange Commission is not fulfilling its duty to protect retail investors, particularly in how it regulates financial advisers, a number of consumer groups asserted in a letter to the agency.

The eight-page letter dated March 10 outlines several areas that the groups say the SEC “can no longer afford to relegate … to a back burner.”

Most of the letter concentrates on ways the groups want the agency to improve regulation of financial advisers and urged the SEC to take “concrete steps” to raise investment-advice standards for brokers.

The Dodd-Frank law gave the SEC the authority to promulgate a uniform fiduciary standard for retail investment advice that would require all advisers to act in the best interests of their clients. The SEC has not acted. Meanwhile, the Department of Labor is poised to re-propose its own fiduciary-duty rule for advice to retirement accounts.

The topic has split the five-member commission. Chairwoman Mary Jo White has promised since November to make her position on fiduciary duty known in the “short term.”

Duane Thompson, senior policy adviser for Fi360, a fiduciary-duty training firm, agreed with the consumer groups that fiduciary duty has languished.

“The SEC seems to have looked more at capital-formation issues,” Mr. Thompson said. “The elephant in the living room is the uniform fiduciary standard. While Mary Jo White has repeatedly said it’s a priority, I’ve never seen it show up on the SEC’s regulatory agenda.”

Other topics the letter highlights include strengthening financial adviser disclosure about conflicts and compensation, reforming revenue-sharing, limiting mandatory arbitration for investor disputes, and beefing up regulation of risky financial products, including some kinds of exchange-traded funds.

“We are concerned that the Securities and Exchange Commission — which has always prided itself on serving as ‘the investors’ advocate’ — appears in recent years to have strayed from its primary focus on its investor protection mission,” the letter stated. “Given the vital role that average investors play in our markets and the overall economy, and the serious shortcomings that exist in the regulatory protections they receive, it is time in our view for these issues to be prioritized.”

Click here to read the entire article from InvestmentNews.

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BrokerDealer.com blog update courtesy of extracts from ThisDayLive.com

Often referred to as alternative trading system, electronic communication network has revolutionised trading on stock exchanges around the world. Despite initial apathy, dealing member firms of the Nigerian Stock Exchange are now embracing remote trading in a bid to woo retail investors writes, Eromosele Abiodun.

Following the introduction of technology, stock markets around the world have grown in leaps and bounds. The Nigerian stock market is a special example of the extent institutions can go if the right steps are taken in the right direction.

The impact of technology on the Nigeria stock market has been phenomenal, indicating the extent institutions can go when the right tools are employed. Technology indeed has taken control of the guts of business and made it possible for tiny, agile companies and stockbroking firms to become contenders.

In a bid to take the local bourse to the next level, the Nigerian Stock Exchange (NSE) had in 2005, introduced remote trading or Electronic Communications Networks (ECN), a system that enable brokers to trade in the comfort of their offices without having to come to its trading floor in Marina.

As you would expect, most stockbroking firms for some reasons (mainly financial reasons) failed to embrace the system, preferring rather to come to the NSE trading floor in Lagos.

Irked by their lukewarm attitude to its effort, the NSE did issue a statement calling on stockbroking firms to embrace remote trading and enjoy the many benefits instead of coming physically to the trading floors on a daily basis.

The NSE’s Deputy General Manager/Acting Head, Market Operations and IT Directorate, Mr. Ogbonnanya Osita, had at that time disclosed that there were already 235 remote trading connections in Lagos besides those deployed in branches across the country.

According to him, the remote trading system enables stockbrokers to trade from their offices without having to come to the floor of the exchange in person, adding however, that stockbroking firms are connected based on request.

Osita had noted that the number of dealing member firms that are using the system is growing rapidly, explaining that most of those stockbrokers who are still coming physically to trade are doing so because of the need to keep relationships with their colleagues.

While the attitude of a few elicited the exchange’s call for change of behaviour, some stockbrokers described remote trading as one of the commendable innovations in recent times.

For instance, the Chief Executive Officer (CEO) of Stanbic IBTC Stockbrokers Limited, Mr. Akeem Oyewole, had told THISDAY that remote trading has helped the growth of the market greatly and has improved the performance of his company.

“We have 10 stockbrokers in our company and it is only one of them who goes to The Exchange’s trading floor to trade physically. The remaining nine trade remotely from our office. It is working fine, it has been a blessing to our operations,” he said.

Also, the Chief Executive Officer of APT Securities and Funds Limited, Mallam Kasimu Kurfi, had told THISDAY that his company was the first to start remote trading at the NSE.

“We have been using it since inception and we have never encountered any serious problem.”

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