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Fixed Income: Fighting for What is Right - YouTube
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you know dave dementia obviously manages
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a a lot of money
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well over half a trillion dollars well
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over 100 billion dollars
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in fixed income and as such we're a big
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player out there in the industry and
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certainly when we see proposals uh
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different types of regulations that come
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about from different regulators and we
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feel that you know shareholders may or
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may not be represented appropriately we
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will be active
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working with those agencies and
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definitely stating our opinion that we
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think is in the best interest ultimately
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of investors
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it's absolutely true we will
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we will always advocate on behalf of our
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investors for fair markets fair trading
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practices
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transparent markets there's a great
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example of that that
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goes back to 2019 on that exact topic so
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let me give a little bit of background
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in 2017 the sec formed an advisory
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committee called fimsecker fixed income
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market structures advisory committee so
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this was designed to get industry
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professionals i think there were 23
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committee members so there were broker
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dealers there were investors there were
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you know investment management firms
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and they were going to advise uh the sec
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on how to make our markets better so
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that's that's a very good thing for us
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uh into early 2018 that committee formed
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a subcommittee on market transparency so
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they're going to
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investigate market transparency
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and make recommendations to the sec
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to our absolute disbelief that committee
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recommends to the sec that in certain
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trades we should actually reduce the
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transparency that we should delay the
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reporting on the the database known as
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trace trade reporting and compliance
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engine it's kind of our corporate bond
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markets ticker tape and for large trades
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they should delay their trades normally
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they are there's a slight delay about 15
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minutes after the trade but now they
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want to delay it uh you know much longer
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a couple days
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we couldn't believe it i i just i was
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shocked it didn't take long to start
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realizing you know we one thing we know
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in the data when when trace came out and
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market transparency increase post-trade
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transparency we saw bid-ask spreads
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narrow over that period dramatically
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well that's a great thing it's a great
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thing if you're an investor um but more
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thought about it you know it's not so
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great if you're a broker dealer broker
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dealer makes money off that spread and
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as those spreads are narrowing um you
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know so is their profit margin so we
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figured out right away was going on and
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we were not going to sit uh
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take that sitting now we were we were
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going to get into a fight and we did so
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we started getting very vocal and very
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active we we participate we're very
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active by the way in in what's known as
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the investment company institute it's a
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sort of a trade group that uh uh we're a
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part of for uh uh investors investment
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companies they were hosting calls we
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took a leadership position and those
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calls basically saying you know this is
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just outrageous that we're gonna we
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fought so hard to get this post-trade
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transparency through trace the market
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did it was long overdue you know when it
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first came out in uh 2002 and now they
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want to start going backwards on it
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we're going to have no part of it so we
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were we were very vocal in that part in
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the ici meetings
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the sec had a period of public comment
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uh and we wrote a very thoughtful letter
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we had the entire
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really the entire company was engaged
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with the co-ceos engaged we had all the
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pm all the research we had legal and
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folks in legal were helping us actually
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you know write out the the paragraphs we
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were supplying with the uh you know our
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thinking on it and and we were just
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extremely passionate uh about that uh
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our letter was was posted in the public
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there were about uh 20 some odd letters
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that were posted the sec and and the
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advisory committee then picked a couple
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of of those letter submitters we were
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one of them to participate in a phone
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call and we had our moment and we were
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just we were just not going to blow it
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and so we got up there and really made
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our case that this
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transparency that there that they're
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trying to remove from the market
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is going to benefit a very small number
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mostly the broker dealers and possibly
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some very very large investment
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houses it's going to benefit them at the
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expense of every everyone else so it's
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not that their trades go uh their
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trading cost goes down and they just go
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away they get shifted onto the to the
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other investors and we we just painted
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that as fundamentally unfair by the end
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of 2019 it became very very clear that
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um
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they were not going to push forward
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again the advisory committee could
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recommended the sec the sec ultimately
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decides on market practices it became
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very very clear that they were not going
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to go forward with this proposed pilot
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program to reduce the transparency so we
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couldn't have been more thrilled and
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what i tell people that we won on that
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one we got in a fight we won and we're
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going to continue to fight for what's
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right you know for our clients and for
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four markets fair markets and for our
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clients we might not win them all but
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we'll always fight for what's right
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