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U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
The Need for Effective Surveillance


Commissioner Luis A. Aguilar

U.S. Securities and Exchange Commission

Washington, D.C.
April 14, 2010

Along with my colleagues, I want to thank the staff for its work in developing this proposal. I have consistently supported efforts to strengthen the Commission’s effective oversight of our capital markets, and I will vote today in favor of proposing a large trader reporting system. This proposal represents a significant step forward in building the comprehensive system of market oversight that investors have a right to expect, and it will clearly further the Commission’s mission to assure fair, orderly, and efficient markets.

Congress expressly authorized the Commission to institute a large trader reporting system almost 20 years ago,1 following the market breaks of October 1987 and 1989. In fact, on two separate occasions the Commission has attempted to establish the reporting system being proposed today.2 I believe that the time has come for us to exercise the authority we’ve been given. The effects of the market turmoil that began in 2008 require us to consider ways to enhance and improve our surveillance of the markets. Moreover, technological developments in the years since the Commission first proposed large trader reporting should not only simplify implementation, but also enhance the Commission’s ability to analyze the data that the system generates.

As we propose a large trader reporting system, however, I want to emphasize my continued support for what needs to be our long-term goal — a consolidated audit trail. A consolidated audit trail would provide broader insight into transactions in the markets and would provide the Commission with the ability to oversee, in real time, activity within and across securities markets. It would also allow us to track individual orders through each step in their life cycle — from inception through modification, routing, execution, and settlement.

I also want to emphasize that any reporting scheme will only be as good as our analysis of the data it gathers. If we are to put the data to use in routine monitoring and analysis of the markets, we will need to have the necessary resources to devote to this important task. As I have consistently advocated, the single most transformational act that Congress could undertake is to allow the SEC to be self-funded. Especially as we move from today’s proposal toward a more comprehensive consolidated audit trail, the ability to set multi-year budgets and maintain appropriate staffing will be crucial to our ability to accomplish our mission.

In closing, I want to thank the staff for its efforts, and I look forward to the comments we will receive on this proposal.

Thank you.

1 Market Reform Act of 1990, Pub. L. No. 101-432, 104 Stat. 963 (1990).

2 See Large Trader Reporting System, Exchange Act Release No. 29593 (Aug. 22, 1991); Large Trader Reporting System, Exchange Act Release No. 33608 (Feb. 9, 1994).



Modified: 04/14/2010