[ by Howard Haykin ]

Market reform is a financial hot-button topic, and these days the spotlights are focused particularly on areas like high-frequency trading and proliferation of new exchanges.  Both have gotten a lot of coverage from media outlets of all shapes and sizes.  [C-I Note:  Rumors have gone so far as to say that magazines like Cosmopolitan and Vogue were "jumping on the bandwagon" with articles that provide advice on what one should talk about when dating an executive with an HFT firm.] 

What Industry Insiders Are Talking About.  A number of events in Washington, D.C., this week put the spotlight on high-frequency trading and other concerns about the structure of the market.  At a Senate hearing on Thursday and a few industry conferences this week, executives at stock exchanges and trading firms laid out potential changes that could prevent disruptions like the technology glitch led to $440 million of losses at the trading firm Knight Capital in early August.

Chris Concannon, an executive at high-speed trading firm Virtu Financial, had this to say to a Senate subcommittee on securities, insurance and investment:  "If we had a blank canvas and we were able to redraw our market structure, it would never look like the model we use today."  Executives, in some cases, say the market had grown too complex and too fast to be safe.

Cornell Professor Maureen O'Hara, the chairman of the board of market technology firm ITG, delivered these points during Wednesday's conference at Georgetown University:

• technological advances had made it cheaper for ordinary investors to buy and sell stocks.
• this progress has created problems that industry participants had only started to recognize - like increased market instability.
• "It's easy for people to say the markets are great, but it's hard to quibble with the fact that no one wants to be there,"

At an SEC roundtable, rescheduled for 10/2/12, market's recent problems will be discussed.  Ahead of that, industry players are calling for a wide array of often conflicting changes to the market.

• Andy Brooks, head of stock trading at T. Rowe Price, said at the Senate hearing that regulators should take immediate steps to slow down the market and eliminate rules that allow high-speed trading firms to operate.
• Larry Tabb, head of market research firm TabbGroup, disagreed with most of Mr. Brooks' ideas.  Instead, he gave 6 suggestions for changes that could make the markets operate more smoothly, including an effort to slow down the creation of new exchanges and other trading venues.  "I think we have gone too far.  We clearly have too many places to trade."
• Joe Mecane, the head of market structure issues at NYSE-Euronext, said at the Georgetown conference that the problems were too complex to be handled in a piecemeal fashion. What's truly needed is a broader rethinking of the way the nation's markets were set up - "A more holistic review of market structure is warranted."

Senator Jack Reed (Dem- RI), who called the hearing, said that the topic required more attention, potentially in further hearings.  "We have recognized benefits from the increased liquidity but now we have to step back and see, at what cost, and how do we make improvements, not just keep pressing along."   [Dealbook,9/20/12 ]