Hockey Fans Don’t Need Regulation
This Taking Stock column is brought to you by JonesTrading
Earlier this week, my thirteen-year-old daughter and I attended an NHL game at Madison Square Garden. While the home team lost by a large margin, the game was extremely enjoyable because well, I was with my daughter and also, because of the memories it brought back from my pre-Wall Street days. As embarrassed as I am to say this, it’s been more than 25 years since I sat in the upper wings for a Rangers game. Instead, my seats have typically been in the safe and sanitized rows behind plexiglass, where spectators are served drinks by arena staff and you seldom have to worry about a confrontation with a fellow fan. There is another feature with these pricier seats. Your view of the game is never obstructed by someone asking an entire row of people to stand up during play so they can wedge into seats 7 to 16, which are in the middle of a row of 22 fans. This never happens because there are ushers who enforce a rule that requires fans to wait until a whistle, or stoppage of play, before entering the aisle and disrupting others. It’s a good rule and I am not arguing against it. However, in the upper wings of Madison Square Garden, as I am sure it is in most stadiums, there are no ushers to enforce such a regulation and that’s okay, because the fans regulate themselves.
It is the mission of all regulatory agencies to protect the interests of investors and that responsibility is bore by industry professionals as well. With any new regulation, cost-benefit analysis needs to be done to determine if the expense justifies the intended benefits to investors. Among other variables, when performing this calculation, one needs to assess how much information the investor is provided with, and whether that investor is capable of making decisions on his own. If the assumption is that an investor is unable to make a sound decision, then the cost of regulation will undoubtedly be higher. I’m not saying that our industry promulgates rules under the assumption that investors know nothing. But I do think there is a lack of appreciation on how much they do know and this has consequences. Consequences that could lead to over-regulation and unnecessary costs that are eventually passed on to investors in the form of higher fees or low asset performance. The expression, “customer experience” is a relatively new, but common expression used by and among retail brokerage firms. STA believes that the primary catalyst for self-directed retail customers in determining where to execute their trades is the comprehensive experience they have with their broker-dealer. I don’t know if he was a hockey fan, but Albert Einstein wrote: “The only source of knowledge is experience.” Regulation needs to protect investors’ interests, certainly, but in a cost-effective manner and with the assumption that investors can make sound decisions if provided balanced and digestible information.
Jim Toes is president and CEO at the Security Traders Association
MiFID II requires unbundling of payments for research.
Chief exec of LSE Group says rebates are a form of corruption.
Trading for liquid bonds could eventually move entirely to central limit order books.
The Central Bank of Ireland launched a consultation on ETFs in May.
CLS has also launched a register for statements of commitment.