For much of the coming year, U.S. institutional equity traders will be focusing on changes to the market's structure, even as they try to help their portfolio managers squeeze out more alpha by trading quicker, smarter and more efficiently.
"We're going to see some real closure on probably the biggest market structure change to hit the industry since the 1997 order-handling rules," said Ted Oberhaus, director of equity trading at Lord, Abbett & Co. LLC, Jersey City, N.J. "This is going to be a huge change."
That "real closure," however, has taken some time to reach Wall Street.
The Securities and Exchange Commission first proposed its Regulation National Market System last February. The proposal seeks to improve linkages between market venues — exchanges, alternative trading systems and electronic communications networks — to allow investors easier access to the best prices. It also seeks to update sub-penny pricing rules and market access fee guidelines.
After a round of public comment, a revised proposal over the summer and another round of public comment in the fall, commissioners laid out their final proposal Dec. 15 and opened a 30-day public comment period. SEC Chairman William Donaldson said he expected the commission to be "in a position to act on Reg NMS early in the new year."