This Q&A first appeared in the magazine of the STA’s 84th Annual Market Structure Conference, which was held Sep. 13-15 in Washington, D.C.
MIKE RASK IS DIRECTOR OF trading for Hodges Capital, a Dallas-based investment advisor, and vice chairman of the Security Traders Association. He will become STA chairman in January 2018. STA President and CEO Jim Toes caught up with Rask to learn more about his background, current responsibilities, and vision for the industry organization.
What led you to become involved in STA?
I have a belief that people who are in professional vocations should be involved in an industry specific trade group or association. For those of us with careers related to trading, the Security Traders Association is the best way that I have found to stay up to date on changes in our industry, proposed legislative and regulatory changes and to network with industry peers.
How long have you been involved with STA?
I have been a member of the Dallas affiliate of the STA since 1999. I joined the Dallas STA Board in 2004 and I was that affiliate’s President in 2013. I was elected to the STA National Board in 2014.
What is your background in the industry?
I began my career in the securities industry as a trading assistant on an institutional sales trading desk. I began to cover my own accounts and build my own book. After five years at that firm I opened and managed the Dallas office for a regional firm. In 2005 I had the opportunity to join Hodges Capital as director of trading and I have been in that role for twelve years.
What are your responsibilities at Hodges Capital?
I am responsible for overseeing all of the trading related activities of our firm. The majority of our holdings are in small-cap stocks so my goal is to get us in and out of our positions without affecting the price of the stock. In addition to trading, I provide our portfolio managers with information on what I am seeing in the market overall and in our specific holdings.
You have held roles on both the buy side and sell side. How does that affect your view of our industry?
Having worked on both sides of the street I have the unique ability to view industry issues from the viewpoint of both a broker and an investment advisor.
We hear in the news about people in the securities industry being accused of and sometimes convicted of industry-related crimes. Does our industry have an integrity problem?
The vast majority of the people in our industry conduct their business by adhering to the highest of industry standards. Yes, there are bad actors who should be prosecuted and dealt with as the law calls for. But think of it this way: name another industry where multi-million dollar transactions are conducted over the phone, with people who you may have not met in person, and you agree to complete the transaction three days from now. It is a testament to the integrity of the people in our industry that disagreements over the details of a trade are virtually unheard of.
Market structure has been a hot topic in our industry for several years. What changes would you like to see?
I believe that the securities markets are unnecessarily complex. I would like to see significantly fewer execution venues and order types. Both of these create an unnecessary level of complexity in our marketplace. I would also like to see a pilot conducted on rebates being paid for order flow. While the existence of rebates presents a conflict of interest that is created when a market participant uses a customer order and receives a benefit, the impact of that conflict needs to be fully understood.
It seems like STA has had an increased emphasis on Washington DC over the past several years. Do you expect this to continue?
Yes I do. Our industry is increasingly affected by legislation and regulation coming out of Washington. STA has made a conscientious effort over the past several years to provide legislators and regulators with unbiased information on issues that are before them. Our organization represents the viewpoints of a wide variety of market participants including buy side, sell side, technology vendors and compliance. Because of this, regulators and legislators value our information and our ability to frame an issue and provide information about how an issue would potentially affect various market participants.
What do you hope to accomplish in your chairmanship?
STA is made up of 25 local affiliates, which are the lifeblood of our organization. I would like further strengthen the bond between STA National and the local affiliates. I would like for STA to be the source that our member- ship turns to for information about our industry and I would like to also further enhance our relationships with legislators and regulators in Washington DC. I would also like to increase buy-side sponsorship at both the local and national level.
How is STA funded?
The majority of STA National and our local affiliate’s revenues come from convention sponsorship. Historically, the vast majority of convention sponsorship has come from the sell side. Over recent years, as sell-side budgets have become tighter, we have seen technology vendors come in and support our organization through sponsorship. One major participant of our industry that I would like to see become involved in sponsorship is the buy side. I am proud to say that my firm, Hodges Capital, has sponsored our organization at both the national and local level. The work that STA does benefits our industry as a whole and I would like to see the buy side support our efforts through sponsorship.
What do you think will be the hot topics in our industry in 2018?
In 2018 I believe that we will be talking about: MiFID II rollout, results from tick pilot, a possible maker- taker fee pilot, and the DOL fiduciary rule implementation. I am also looking forward to the direction SEC Chairman Clayton goes in when he mentions the long-term investor.
What do you like to do outside work?
Outside of work I find great joy in spending as much time as possible with my wife and two young children. We are involved in activities at our church, community and school. I am active in competing in triathlons, have run three marathons and many half marathons and other races. I also enjoy water skiing, wood working and auto racing.
When did you develop an interest in the financial markets?
I have had an interest in business and investing for almost as long as I can remember. My parents were in business for themselves when I was young so I grew up in an entrepreneurial environment. When I was young I worked at my parent’s business, mowed yards and sold mistletoe at Christmas. While in college I started a shaved-ice dessert (fancy snow cone) business. I started with one location and grew the business to five fixed and one mobile location. Founding that business and running it for seven years taught me more real life business lessons than the text- books that I studied while earning my entrepreneurship degree did, and that entrepreneurial spirit and business intellect still lives inside of me today.
Closing comments?
I am honored to lead the Security Traders Association in 2018, however, the Chairman of the Board is just one person within a great association. I am proud to serve alongside a group of highly accomplished and very competent volunteer board members, and we are all very fortunate to have a three hardworking industry veteran STA staff members: Jim Toes, president and CEO; Kerry Flynn, head of affiliate relations; and Dawn Combs, head of planning and product services.