Washington is drawing securities traders, as they attempt to decipher the SEC's actions.

Washington is where securities traders are congregating, with the main focus being on deciphering the actions of the Securities and Exchange Commission.

It's concerning when one of the session topics is titled "A Buy Side Guide to Navigating the SEC."

The Security Traders Association (STA) is a national organization comprising professionals in the financial services industry's trading sector. These individuals include broker-dealers and technology providers who execute trades on behalf of customers. They are responsible for making trades happen whenever a button is pressed to execute any type of trade, such as equities, bonds, options, mutual funds, or ETFs.

The conference, initially focused on market structure, has evolved over time to attract more than 800 attendees, representing a significant change from the early days when I first started attending in the late 1990s.

The trading business is changing

In 1999, the Security Traders Association of New York hosted its annual conference at the Marriott Marquis in Times Square. The event attracted 4,000 attendees, and the band that performed that night was Kool and the Gang.

Since 1999, the membership has significantly shifted, with most members being buy-side traders who worked in various roles such as portfolio managers, analysts, and traders.

Due to the widespread use of electronic trading, the group has become smaller. However, it has been replaced by a more diverse group. The options trading market, ETF business, and online brokerage community have experienced significant growth. Notable are data providers, exchanges, clearinghouses, and firms that offer trading services such as algorithms. Additionally, there are a few buyside firms, including hedge funds.

Hot topics: Aggressive SEC agenda, AI, market structure and crypto

The SEC is at the center of discussions, with a contentious relationship between the broker-dealer community and the SEC, especially since Gary Gensler has been busy with nearly 50 proposed and finalized rules that are greatly affecting the financial services industry.

Some of the hot topics:

1) The SEC is concerned that investment advisors are using AI to monitor their clients' trading habits and using that information to encourage them to trade more or manipulate their activities. The industry believes this is excessive regulation, as it would require firms to submit extensive reports.

Gensler has proposed an auction process to increase competition between exchanges and broker-dealers, but the industry believes that there is already sufficient competition and that the firms involved offer competitive pricing.

At the conference one year ago, it was widely believed that the U.S. would have a stablecoin and a spot bitcoin ETF by now.

So far, we are 0-2.

Commissioner Hester Peirce, a Republican and vocal supporter of crypto, will be interviewed by Jonathan Kellner, the CEO of MEMX at the conference. Peirce has been critical of the Democratic majority's stance towards crypto. Gensler, who is not at the conference, will soon have to decide whether to approve a spot bitcoin ETF or engage in further litigation.

Despite Gensler's absence, NYSE General Counsel Jarkowski will discuss jurisdictional issues with CFTC Chairman Behnam, who may also address the SEC and CFTC's differences on crypto.

Matt Andresen, CEO of Headlands Technology, will interview Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer for Robinhood, who is a former SEC commissioner and has been critical of the SEC's stance on crypto and its rulemaking. Gallagher is also expected to discuss payment for order flow.

STA chief is going into politics

Recently, longtime STA CEO Jim Toes declared his candidacy for Congress in Long Island as a Republican, aiming to defeat Representative George Santos, who is currently facing federal fraud charges (additional charges were filed yesterday).

He said that he was running because he was unhappy with the congressional leadership, but he also stated that 80% of the reason he was running was because he was concerned about the direction of the country and the division that existed in society. He described himself as a hardcore moderate with unbending principles.

Santos, whom he described as a "fabulist and a liar," is another 20% reason for running.

Toes acknowledged that he was bucking a longtime trend.

He chuckled as he said, "Typically, you move from politics to a trade association. However, I'm going against the norm by leaving a trade group and entering politics. It's like I'm doing everything backwards, but sometimes you have to take a step up."