Introduction to HMA 

The Healthy Markets Association is a not-for-profit member organization focused on improving the transparency, efficiency, and fairness of the capital markets. Healthy Markets promotes these goals through education and advocacy to reduce conflicts of interest, improve timely access to market information, modernize the regulation of trading venues and funding markets, and promote robust public markets. Its members include public pension funds, investment advisers, broker-dealers, exchanges, and data firms.

HMA members have come together behind one basic principle: Informed investors and policymakers are essential for healthy capital markets.

HMA’s top priority is informing its members and subscribers of developments in policy and regulation, and how they may impact the capital markets. At the same time, HMA also advocates for policies and rules intended to:

• reduce conflicts of interest in trading financial assets; 
• improve the quality and accessibility of information for market participants and regulators;
• improve oversight of trading centers;
• improve market efficiencies through promoting public markets; and
• improve market stability and integrity, including oversight of money market funds.

In Congress, HMA is frequently a key source of legislative commentary and analysis. HMA leaders and member organizations have testified before Congress, and HMA routinely provides technical and other assistance to legislators and staff in Congress. In 2021, for example, HMA and its members provided statements to Congressional Committees for several hearings, including on issues such as payment for order flow, market structure, order routing and broker conflicts, and other issues.

HMA is also a frequent commenter before regulators such as the Securities and Exchange Commission, providing insight on new rules and proposals. In the first eight months of 2022, for example, HMA submitted sixteen regulatory comment letters, which addressed a diverse mix of issues: (1) equity market structure reform including best execution, market data usage, and more; (2) treasury trading market structure reform; (3) securities lending reform; (4) money market fund reform; (5) research payment practices (and MiFID II); (6) exchange filings and related fees; (7) investor position reporting; and (8) index regulation.

Reviewing the arch of HMA’s education and engagement efforts, we identify five unifying principles:

Principle I: Reduce Conflicts of Interest in Trading

Conflicts of interest in the capital markets are unavoidable, but the costs to investors can be significant. HMA’s efforts to reduce costs and conflicts of interest that harm investors currently include working to:

• Support Modernizing Best Execution Obligations for Brokers and Investors

• Support Reducing Distortions Caused by Routing Incentives, Including Through Improved Disclosure and Prohibitions

• Support Modernizing the Order Protection Rule

• Support Modernizing Execution Quality Reporting (e.g., Rule 606 and NBBO)

• Support Separating Research and Trading Considerations, Including Through Ending Broker-Compelled Bundling (aka Ending SIFMA’s MiFID II No Action Letter)

• Oppose Post-Trade Name Give Up

Principle II: Improve Timely Access to Essential Market Information

Timely access to essential market information is the lifeblood of fair, orderly, and efficient markets, as well as effective oversight of them. HMA’s efforts to promote the timely access of essential market information, currently include working to: 

• Equities: Urge Inclusion of Odd-lot Information on the Public Market Data Stream (SIPs)

• Equities: Urge Regulators to Collect and Analyze Complete and Accurate Market Information (Including the CAT) 

• Equities: Support Timely Position Reporting

• Equities: Support Disclosure of Securities Lending Information

• Fixed Income: Oppose Delayed Block Trade Reporting

• Fixed Income: Oppose Creation of FINRA Corporate Bond Reference Database 

• Treasuries and Derivatives: Support Pre-Trade Price Transparency

• Treasuries and Derivatives: Support Comprehensive Dissemination of Post-Trade Details

• Treasuries and Derivatives: Oppose Delayed “Block” Reporting

• Treasuries and Derivatives: Urge Regulators to Collect and Analyze Complete and Accurate Market Information (MIDAS for Treasury and CFTC)

Principle III:  Modernize Regulation of Trading Venues

The oversight of essential market centers has not kept up with the evolution of the markets themselves, including the conversion from non-profit to for-profit, shareholder-owned ventures. Further, the proliferation of ATSs and electronic trading in asset classes beyond equities (e.g., fixed income and crypto) begets a need for updating them. HMA’s efforts to modernize trading venue regulation include working to: 

• Support Modernizing Regulation and Oversight of Exchange Rulemaking Process

• Support Modernizing Regulation of Alternative Trading Systems and Other Off-Exchange Venues of All Types

Principle IV.  Promote Robust Public Markets

Congress and the SEC in recent years have revised the markets rules so that issuers generally do not need to undertake a traditional public offering to raise all the capital they need. These actions have pushed many of the best opportunities into the private markets, and forced investors to chase them into the higher-risk, higher cost marketplace. Put simply, the expansion of the private markets has come at the expense of the public markets and the special safeguards that apply in public markets. The vast majority of capital now raised is outside of the regulatorily mandated public disclosure and accountability regime, and the number of public companies has shrunken. While private markets have a role to play, the public capital markets typically offer significant advantages for investors, including lower risks and dramatically lower costs. HMA’s efforts to promote robust public markets currently include working to:

• Support Expanded Disclosures for Private Offerings

• Reduce Size and Distributions of Exempt Offerings

• Consider Restrictions on Trading in Private Securities

Principle V:  Modernize Regulatory Framework for Funding Markets

Following the 2008 financial crisis, the Commission adopted extensive reforms in 2010 and 2014 to enhance the liquidity and stability of money market funds.  The goal of the reforms was “to address risks of investor runs on money market funds, while preserving the benefits of the funds.” Unfortunately, the latter reforms failed when tested by the 2020 pandemic upheaval. HMA’s efforts to improve the funding markets currently include working to: 

• Strengthen MMFs, Including By Eliminating Fee/Gate Linkage to Weekly Liquidity Assets

• Improve Transparency in Securities Lending Markets