Former SEC Chairman Harvey Pitt tells FOX Business Network’s David Asman and Liz MacDonald that the SEC needs a sizable increase in its technology budget, more transparency is a must, that there need to be more incentives for long-term trading and that Chairman Shapiro is doing a good job.
Here are the key highlights from the interview, courtesy of Fox Business Network:
On the issue with in-and-out trading:
“More importantly is that we have not yet fixed the abuse of short trading problems that the markets continue to reflect.”
“All of the incentives right now are toward day trading and in-and-out trading. We’ve become a nation of day traders. What we really need are rules and laws that basically create a real incentive for long term investing. That would be a huge help in reducing some of this precipitous action.”
On finding the cause of the near 1000 point drop:
“I think the one thing we can say is that the public has a right to know why markets precipitously dropped. The most important thing is to explain what happened. And the fact that we are now over a week away from the events in question and still don’t have an explanation is I think an indication that the markets need to really beef up their surveillance and their record keeping. We have to be able to track trades in real time but that’s not happening right now.”
On how the SEC can improve:
“I think the SEC needs a sizeable increase in its technology budget. And I think it has to really be focused on monitoring trades of all kids, and that was what my second point was.”
On the need to have uniform rules and better circuit breakers:
“There have to be uniform rules and better circuit breakers so that the markets don’t experience these precipitous drops without at least a significant pause for everyone to stop look and listen to everything that’s going on.”
“Also try to fix the interrelationship problem between derivatives and the underlying equity securities that they trade about.”
On public criticism preventing the SEC from doing its job:
“I think there’s a real possibility that with all the bashing going on publicly, there’s less opportunity for the SEC to do what it’s actually quite good at doing. I think Chairman Shapiro has got her eye on the ball and she is improving the SEC staff’s moral. They’re disciplined, they’re functioning and so on. But every time you turn around, somebody else is taking another shot at the government and right now, that’s not going to help fix anything.”
On the uptick rule:
“I have thought that the elimination of the uptick rule was a problem.”
On the need for transparency:
“We absolutely need transparency, the problem is that the law is so diffuse, that getting the real benefits out of it is problematic. What we need is anyone who trades any kind of instrument that can have a significant impact on the marketplace should be required to make full disclosure. And the government should be required to analyze and publish its analysis of all that data.”
