ISITC Survey Finds 74% In Favor of Reinstituting Uptick Rule

The International Securities Association for Institutional Trade Communication (ISITC), a industry trade group focused on standards in transaction processing and related communications, looks at affects of financial crisis on member firms. ISITC asked respondents to identify whether their firms had been affected by the crisis in four major areas including: reduced headcount, reduced IT budgets, increased volatility and/or increased compliance requirements. Of these, the majority of respondents identified reduced headcount and reduced IT budgets as having the most impact (74% and 69% respectively), while 25% noted that their firms had been affected by increased compliance requirements, and 23% said their firms have been affected by increased trading volumes. Additionally, 46% of respondents agreed that market volatility is creating clearing and settlement challenges for their firms.

Genevy Dimitrion, Chair of ISITC, says, "ISITC is keen to capture the insight and ideas of our members on the important issues facing financial firms today. We believe that this information provides a snapshot of the state of the financial services markets that will contribute to a more informed discussion of what is happening within the industry."

The survey results showed that responding members believe that government should take a stronger approach in regulating certain aspects of the financial markets. Sixty-one percent of respondents cited increased government oversight as more effective in resolving the financial crisis, while only 14% suggested that decreased government oversight would be more effective. In particular, 81% of respondents support regulation of pricing agencies (as opposed to 14% against regulation.) Seventy-six percent support new limits on leverage, and 74% support re-instituting the uptick rule for short sales. Much of this focus on regulation was the result of respondents recognizing the need for the industry to regain the public's trust. Comments such as "loss of faith in our markets," "restoring confidence" and "delivering quality products in a challenging time" were common.

Looking forward, the first priority identified by respondents for their firms is operational risk management, followed by cost reduction and increasing efficiency in order to meet client needs.

Respondents comprised a cross-section of ISITC members, including middle and upper-middle managers, from all segments of the securities processing industry, including asset managers, broker dealers, investment bankers and custodians, as well as the technology firms serving these industries.