Chris Concannon, an executive at high-frequency trading firm Virtu Financial LLC, is under consideration to oversee trading and markets at the U.S. Securities and Exchange Commission, according to people briefed on the discussions.
Concannon met April 10 with the new SEC chairman, Mary Jo White, to discuss the opening, said the people, who spoke on condition of anonymity because the meeting was private.
In the 1990s, Concannon worked at the SEC in the same division, which monitors exchanges, brokerages and dark pools, where prices aren’t publicly displayed. A partner and executive vice president at Virtu, Concannon has held top jobs at early electronic trading platforms and at Nasdaq OMX Group Inc.
White, an ex-prosecutor, lacks expertise in market regulation and has identified high-frequency trading and market complexity as priorities for her term at the SEC, which began April 10. Concannon, with his inside view of automated modern markets, would be a departure for a division that has typically been run by attorneys with little trading experience.
“I’d want someone who understands the markets, who is extraordinarily brilliant and not afraid to say the outrageous and who plays well in the sand pile,” David A. Lipton, director of the securities law program at Catholic University School of Law in Washington, said in a telephone interview. “Chris Concannon fits that to a T.”
Concannon, 45, wouldn’t comment about his talks to run the SEC’s Trading and Markets Division. SEC spokesman John Nester also declined to comment.
One of White’s most immediate tasks is hiring. Along with the trading and markets job, she needs to fill leadership posts in the agency’s enforcement and corporation finance divisions.
If chosen, Concannon would be at the forefront of the SEC’s push to protect individual investors from the potential dangers of increasingly fragmented markets and high-speed computerized trading.
The SEC has been under pressure to improve market stability since the May 2010 “flash crash,” when the Dow Jones Industrial Average temporarily lost more than $1 trillion in market value. It took the SEC more than four months to reconstruct the factors behind the crash, which it blamed on a single trader’s algorithm.
SEC officials say they continue to study whether high-frequency traders help or harm modern markets. White asked whether such firms “result in unnecessary volatility, or create an uneven playing field” during her Senate nomination hearing in March.
“The experts and studies to date have not been consistent or definitive in their observations and findings about whether and to what extent harm is caused by the current market structure and practices,” White told the Senate Banking Committee on March 12.
In August, Knight Capital Group Inc. was nearly driven into bankruptcy by automated trading errors that cost the firm more than $450 million. Knight agreed in December to be acquired by automated market maker Getco LLC, which beat out a competing offer by Concannon’s firm, Virtu.
Concannon is a graduate of Catholic University’s law school, where he studied under Lipton. He worked at the SEC from 1994 to 1998.
In addition to meeting with White, Concannon spoke April 9 at a panel organized by the SEC and Financial Industry Regulatory Authority, which discussed oversight of high-speed traders and market complexity.
Concannon said the right approach to monitoring high-speed trading is to require technology controls, such as the SEC’s so-called “market access rule,” which requires brokers to employ safeguards against erroneous orders.
Defining and making rules for high-frequency trading is “a very difficult game to play as regulators,” Concannon said at the forum. Instead, “let’s put filters around the market to protect. Let’s put obligations in place for people to make sure there aren’t inappropriate behaviors.”
Before joining Virtu, Concannon was executive vice president of Nasdaq. He also serves on the board of the Depository Trust and Clearing Corporation and on an advisory committee of the Commodity Futures Trading Commission.