The budget for the SEC must grow by at least a quarter for fiscal year 2015 to help the commission better monitor high-frequency traders and fight alleged wrong-doers in court, according to SEC chairman Mary Jo White.
The SEC needs $1.7 bn in next year’s budget, compared with $1.35 bn last year, to upgrade technology so it can monitor high-frequency trading (HFT) firms, hire several hundred new staff members, bolster enforcement operations and increase resources for litigation, White has told the US House Committee on Appropriations.
‘We are at a critical point in the deployment of more sophisticated technology tools and platforms, and it is vital we have the resources necessary to continue modernizing our IT systems and infrastructure,’ she said. ‘With what I believe is a thoughtful and targeted approach to our resource challenges, the FY 2015 budget request of $1.7 bn would allow the SEC to hire an additional 639 staff in critical, core areas and enhance our information technology.’
White’s testimony came a day after the Wall Street Journal published details of an FBI investigation into some HFT practices. According to the paper, the probe centers on whether or not HFT should be considered insider trading when high-frequency traders act on information others can’t yet see. New York State Attorney General Eric Schneiderman has also called for new efforts to eliminate the ‘unfair advantages’ enjoyed by HFT firms.
White said a budget of $1.7 bn would allow her to upgrade and expand the SEC’s array of data-analytics tools, enhance information security, create a central repository for collected data, improve the commission’s website and create an automated ‘triage’ system to help process tips and complaints. Technological upgrades would also ‘facilitate the analysis of trade and order data that reflects, for example, HFT and trading on off-exchange venues where pre-trade prices are not typically available to the public,’ she told Congress.
White also said she wants to hire an additional 316 people for the regulator’s office of compliance inspections and examinations to examine more registered firms as well as crowdfunding portals, swap-market participants and private fund advisers. She further aims to hire 45 people, mainly financial economists, for risk assessment work and to add staff in the division of corporation finance, the division of investment management, and elsewhere.
