Great establishment of scientists, every major Scientific Organization in the country, perhaps dr. Bodkin is right and they are all wrong, but i am not sure that would be the prudent course for our country. Thank you all very much. We are turned. Adjourned. E [captions Copyright National cable satellite corp. 2014] [captioning performed by national captioning institute] next, remarks by securities and Exchange Mission chair Mary Jo White. After that Martin Omalley talking to democrats in iowa. 7 00 a. M. , your calls and comments on washington journal. , debbieakers Wasserman Schultz of florida. She talks politics in the middle of the primary season. She also talks about the new Republican House leader and looks ahead to the fall elections and campaign 2016. Here are some of her remarks. Host is there a democrat other than Hillary Clinton who could he and national standardbearer for the democrats at this point . Guest of course there is. Guest no one else can even get started. Guest well, that is not entirely true. We have a Vice President of the United States certainly who could be a standardbearer. Im the chair of the dnc so i have to credibly manage our prospects. Of we have a deep bench potential candidates, whether it is secretary clinton, Vice President biden or any one of a number of candidates. Martin omalley, the governor of maryland. Or andrew cuomo from new york. Or mark warner from virginia. The list goes on. Guest you were one of the earlier supporters. You endorsed her in 2007. Toyou think theres a need coalesce around her as a party or as a contested democratic primary in 2016 good for the party . Guest honestly, i think we are going to have a robust president ial campaign, like we always do in this country. Will paraphrase my counterpart again at the rnc who himself said that they are going to have be hardpressed to win another National Election unless they get themselves right with the groups that they have alienated at are the swing votes and the keys to winning a National Election. So what we need to do is continue to make sure that we focus on the priorities of the american people, which are policy, newthat tax Economic Policy, through education and environmental policy, health care policy, that sure people can have more opportunities to create a better way of life for themselves. Democratic National Committee chair representative debbie Wasserman Schultz of florida on at 10 00rs today a. M. And 6 00 p. M. On cspan. On fridays securities and Exchange Commission chair Mary Jo White outlined new stock market rules in an event hosted by the Economic Club. The proposed changes include oversight of highspeed traders and improving the transparency of private trading venues. This is about 45 minutes. If people could please get seated. Thank you. Please get seated. You are making me feel like a party pooper here. Dudley, vice chair of the Economic Club of new york and also president of the Federal Reserve bank of new york. I want welcome everybody to the 438th meeting of the club in our 107th year. The economic love is the nations foring Nonpartisan ForumEconomic Policy speeches. 1000 speakers have appeared before the club, and this has established a very strong tradition of excellence. I would like to recognize the 214 members of the Centennial Society that have contributed to ensure a sound future for the club. I would like to welcome the students here today from Brooklyn College of law, Columbia University business, nyu, fordham, their attendance is made possible by our members. We are honored today to hear from Mary Jo White, chair of the securities and Exchange Commission. I for one am very happy to see she is at the sec performing so ably in leading the institution. Arrived in april last year with decades of experience as a federal prosecutor. As a u. S. Attorney for the Southern District from 1993 to 2002, she specializes in prosecuting complex securities and Financial Institution fraud cases and International Terrorism cases. Chair white then became the chair of the Litigation Department in new york. She earned her undergraduate degree Phi Beta Kappa from william and mary. Her masters degree in psychology from the new school for social research. She earned her law degree at columbia law school. Chair white, the floor is yours. [applause] i would like to acknowledge the presence of two of my esteemed former colleagues. The former chairman of the sec. Quite resist saying that whoever arranged for the yankees to sweep the Toronto Blue Jays for my arrival, i will be grateful. I am really happy to be here on this particular day. I may not be able to say that the next time. What i want to speak to you about is the current state of our Securities Markets. An issue that i know is on a lot of peoples minds and one that i think is well suited as a topic for the Financial Capital of the world where we are. The Securities Markets are the largest and most robust in the world. And they are fundamental to the global economy. They transform the savings of investors into capital for thousands of companies, add to nest eggs, Center Children to college, turn American Ingenuity tomorrows innovation. Finance Public Infrastructure and help transfer unwanted financial risks. The state and quality of our equity markets in particular have received a great deal of attention lately with the discussion that actually has expanded well beyond those who regularly think and write about these markets to include everyday investors concerned about investments they make and the savings they depend on. I have been closely focused on these issues since i joined the sec a year ago, and i welcome the broader dialogue. Two weeks ago, a few blocks from here, i spoke about the secs plan to strengthen our current equity Market Structure. In addition to outlining a review of our own rules and targeted initiatives, i emphasized our commitment at the sec to comprehensively review and address core Market Structure policy issues, such as the overall fairness of trading in highspeed markets, changes in the number and nature of trading venues and conflicts of interest that brokerdealers. Do iswhat i would like to continue and actually brought in that discussion about the fundamental issues, focusing on actually the changing nature of one of the most basic of Securities Markets options. Intermediation. And at its simplest, intermediation means the Services Offered by market professionals to execute the buy and sell orders of investors. Services offered by brokers, dealers, and exchanges. Just as in other segments of the economy, forces of technology can transform east services and they have done so. A central challenge for us at the sec is to adopt regulatory approaches that inshore intermediaries harness the forces of technology and serve then to better needs of investors in each of the markets we oversee, not just in equities but also in fixed income and derivatives. To understand this challenge, i want to talk first about why competition and technology are so important to how we address Market Structure issues generally and the role of intermediation in particular. I will then turn to contrasting markets to illustrate the complexity of our task as regulators. The equity in fixed income markets have been affected are not affected by competition and technology. U. S. Macroeconomy, all Securities Markets operate within the structure of rules, technology, market practices, and other constraints that establish the boundaries for interactions between buyers and sellers. It is important to recognize that this structure does not just mean regulation but also the much more complex interaction among regulation and other factors like competition and technology. Every incremental change in these interactions can produce significant, sometimes unintended economic consequences that may actually not become evident for years or decades. So this dynamic reality means that we should not be chasing Regulatory Solutions that fix the Market Structure for once and for all. Our markets are not broken or static. In that sense, our work on Market Structure is never finished. The speed with which technology and markets change makes that impossible. Instead, we must always be focused on what in our Market Structure can be improved for the benefit of investors and companies. Taking this approach requires us to expand our perspective, both in terms of time, considering developments well past the last few years, and in terms of markets, understanding the differences among markets rather than simply excusing them as an inevitable consequence of different products and structures. If we stand too close to the particular problems in a particular market at a particular time, we may well fail to fully understand the broader forces that are at work and the regulatory choices available. So consider the connection that some have asserted between the rise of highfrequency trading and the implementation of regulation in 2007. The commissions most recent set of rules designed to carry out our statutory mandate to establish a National Market system for equities. Tradeation includes a rade through provision. Some of argue that this facilitated the fragmentation of volume among many trading venues enabling highfrequency traders to flourish by exploiting the fastest connection among these venues. Given the current prevalence of highfrequency traders in our equities markets, some put the number at 50 of daily volume, one might reasonably ask whether regulation did in fact change the rules of the game in favor of speed . As a regulator assessing our markets, however, we cannot rely simply on the temporal juxtaposition of regulation and High Frequency trading. The forces at play are more complex. Be seen in the data from other markets both in the United States and around the world, many of which are also now characterized by high levelbusy trading but none of which have their own regulation. Rise oflight, the highfrequency trading emerges as a more complicated story than simply the unintended consequences of regulation. S p 500 example the futures contract which is one of the most actively traded products in the United States and which is not subject to regulation nms or sec oversight. Unlike trading in equity markets multiplespread among exchanges, all trading is centralized on the Single Market the chicago mercantile exchange. It does not use a pricing structure. Most u. S. Equities exchanges. In most respects, the Market Structure for the emini is nothing like the Market Structure for u. S. Equities. Yet studies indicate very much like the equities markets the highfrequency trading firms account for more than 50 of emini trading. Comparisons demonstrate a need for a wider lens in evaluating Market Structure issues and proposals for changes. That wider lens inevitably brings competition and technology into view. Perhaps nowhere has the impact of the forces of technology and competition been more profound than in how intermediaries have changed and intermediation has changed over the last 20 years in equities and listed options. Since 1934 when Congress First mandated regulation of trading in the u. S. Securities markets, intermediation has been defined by respective functions of exchanges, brokers, and dealers. Exchanges provide facilities that bring together purchasers and sellers of securities for a specified fee. Brokers or agents that engage in the business of effecting transactions in securities for the accounts of others, for an explicit commission. And dealers are principles. Sell securities for their own account. Some of these dealers are highfrequency traders. Now, to complicate things a bit further, the neat lines that Congress True in 1934 have not resulted in models of intermediation that are clearcut or uniform across Securities Markets. Most obviously the functions of broker and dealer have often been combined. There is a reason why we call them brokerdealers. The conflict between investors interests and the intermedia ries interest has been a source of concern for the sec. Another type of dual role in exchanges and dealers have acted collectively to control Competition Among dealers and setting prices. This occurred in the 1990s. Conflicts ofo interest, intermediation when unnecessary, inefficient, or un competitive can unnecessarily increase the cost to investors. The fees charged by exchanges and brokers may be excessive in the absence of effective competition. Serious concerns have been raised about intermediation by dealers excessive intermediation. Given the persistent concerns of conflicts of interest and investors costs we must rethink the way that we look at intermediation. In particular for a given market, we must ask whether intermediation has harnessed competition and technology in the service of the investors. Are the benefits being realized by investors . Are there unintended consequences adversely affecting investors . Is regulation appropriately tailored to the Competitive Dynamics and Technological Developments of the market . At theg back to look contrast between the equity and fixed income markets, may actually help us better understand these questions and the inherent complexities of the regulatory decisions of the sec. U. S. Equity markets, competition and technology have had a profound effect for over many years. Generating enormous benefits for investors and issuers. Equity markets today our host to a diverse set of e xchanges that match buyers and sellers. Dealer intermediation is substantial. But many orders are not intermediated on these matching venues. They are being executed by brokerdealers before they ever reach such a venue. Off Exchange Trading now represents more than 35 of equity volume. Compared to just 25 five years ago. And majority of this file reflects brokerdealers executing directly the orders of both retail and institutional traders. So today, even in the very lively debate about the various aspects of equity Market Structure, one would be hardpressed to find concerns being expressed about a lack of Competition Among equities in changes and other intermediaries had failed to take advantage of new technologies. At lease with respect to exchanges, this is a major change from the past where a primary concern was for years the potential for dominant markets to stand in the way of forces of technology and competition. This was certainly a concern in the forefront in 1975 when congress amended the exchange act to direct the commission to facilitate the creation of the National Market system. And it continued into the s withon of regulation nm fears that competition would be limited to the New York Stock Exchange and nasdaq. We are now living in a much different world where many are questioning whether the pendulum has swung too far and we have too many venues, creating unnecessary complexity and cost for investors. Years, the sec0 has worked hard to further the statutory objectives of the National Market system which include the efficient execution , pricesactions transparency, competition, best execution, and an opportunity for investors to meet directly. But as previous commissions have noted, these objectives are not entirely aligned. In particular, the goal of Competition Among trading venues can lead to what we generally all call fragmentation where orders may be spread among competing venues. Maymuch fragmentation detract from efficient execution and opportunity for investor orders to meet directly by creating opportunities for excessive intermediation. The sec has soft paths to balance these objectives in advancing the interests of investors. Thate could credibly claim this path is an easy one. For example, one challenge arose in the 1990s and the