| NEW YORK/WASHINGTON
NEW YORK/WASHINGTON Feb 13 The U.S. Securities
and Exchange Commission is close to naming lawyer and former
regulator Stephen Luparello as head of its division that
oversees exchanges, brokerages, and clearing agencies, according
to people familiar with the situation.
Luparello is SEC Chair Mary Jo White's top pick as director
of the Division of Trading and Markets, though an official offer
for the job has not yet been made, one of the people said.
The government is running a background check on Luparello,
who will accept once the process is finished, the source said,
adding that it is unclear how long the background check will
Luparello, currently a partner at law firm WilmerHale, has
already had interviews with top SEC officials, another source
The SEC declined to comment.
Prior to WilmerHale, Luparello spent 16 years at the
Financial Industry Regulatory Authority (FINRA), where his
responsibilities included market regulation and enforcement. He
has also worked for the SEC in the past, as well as the
Commodity Futures Trading Commission.
The SEC has been trying to fill the Trading and Markets post
for months now, but has had difficulty finding someone to accept
the job. Unlike some of the other top SEC jobs, the position
requires in-depth knowledge about niche, in-the-weeds SEC rules
that affect exchanges and broker-dealers.
Other people who have been approached for the job include
Chris Concannon, a former executive with Nasdaq OMX Group Inc
who now works for high-frequency trading firm Virtu
Financial LLC, and Joseph Lombard, a market structure expert at
law firm Murphy & McGonigle.
The division has the busiest agenda this year in the way of
rule-making compared with the rest of the SEC's divisions.
It is tasked with completing work on all of the new rules
required by the 2010 Dodd-Frank Wall Street reform law on
It is also trying to finalize a rule aimed at reducing the
chances of major market glitches, a measure that came about in
the wake of several high-profile technology failures including
the near-collapse of Knight Capital, now a part of KCG Holdings
, following a $461 million trading error.
The division also serves as the SEC's first line of defense
in the event of a major market event.
In the case of the May 6, 2010 "flash crash," for instance,
the division was responsible for piecing together what happened
to cause the Dow Jones Industrial Average to plunge more than
700 points before sharply rebounding.
Although the flash crash was not caused by high-speed
trading firms, it prompted a major debate over whether such
trading strategies may disadvantage certain smaller traders.
Now, several years later, the division is still studying
what, if any, changes may be in order to improve the U.S. equity
In particular, many SEC commissioners have asked the staff
there to re-evaluate the impact of a 2005 reform known as "Reg
NMS." That rule was designed to spur more competition among
exchanges and ensure an even playing field for investors.
But since its inception, critics have alleged the rule has
led to fragmentation of the market and has spurred the rise of
As head of the division, Luparello will be in charge of
reviewing what, if any, market structure rules are in order.
The SEC recently started subscribing to the same proprietary
market data feeds used by high-speed firms, and has been
studying the information to better understand market trends.
Last year, the agency launched a new website that lets the
public get a snap-shot of the data and conduct its own research
The coveted director position is currently being filled by
an acting director, John Ramsay.
Bloomberg first reported that the SEC was considering
Luparello for the job.