Last week the SEC announced that Brett Redfearn has been named Director of the Division of Trading and Markets. The Division oversees all aspects of the securities markets, including the various marketplaces such as the New York Stock Exchange and NASDAQ, broker-dealers, self-regulatory organizations, clearing agencies, transfer agents and all other market participants including private investors. 

The appointment is noteworthy, and certainly unprecedented, as the Director’s chair has traditionally been occupied by a lawyer with experience working with securities firms and the securities markets. The only exceptions to this in at least the past 30 years were two former SEC Chief Economists who served as Division Directors. 

Mr. Redfearn, on the other hand, is from the business side of the securities industry. After nearly eight years at the American Stock Exchange, he moved to Bear Stearns & Co., and then to J.P. Morgan where for the past several years he has been head of equity market structure strategy and lately head of market structure for all global markets. He has also served on the boards of the Chicago Stock Exchange, BATS Global Markets, BIDS Trading, and the National Organization of Investment Professionals. As a result, the Division will now be run by someone who brings an alternative perspective to the post. 

With extensive experience in markets and market structure, two principal areas of focus of the Division, and his understanding of how the markets work, what investors are looking for, and how market participants operate in the current environment, the new Director will likely be looking at regulatory issues differently from his predecessors. Significantly, he has spent much of his professional career focusing on the interaction of technology, business needs and regulation, and how they collectively impact trading and investment practices of the various segments of market participants. He has had leadership roles in building electronic trading products and platforms, critical components of today’s computer-driven marketplace. 

The big question is how Mr. Redfearn’s perspective will impact his tenure at the Division. Certainly he has an understanding of the impact of regulation on securities firms and, as a senior official of more than one such firm, an understanding of the needs and concerns of their customers and market participants in general. He also has extensive experience developing solutions to address those concerns. What is unknown, of course, is how that experience will translate into the creation and maintenance of a regulatory agenda. Considering the competing and sometimes conflicting pressures that arise from various constituencies, from Congressional oversight, to press coverage, to the differing demands of the diverse community of market participants, this can be a daunting proposition for any Director. It will very interesting to see whether Mr. Redfearn’s unique background turns out to be more of a help or a hindrance.

We fully expect it to be the former.  We certainly wish Mr. Redfearn the best of luck in this undertaking. His success will benefit all of us.