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March 1, 1998

Campbell: Size Rule Helps Traders

By Jeffrey L. Winograd

The National Association of Securities Dealers is seeking the approval of the Securities and Exchange Commission to allow market makers to quote all Nasdaq stocks in 100-share minimum proprietary trade quotes, J. Patrick Campbell, Nasdaq's executive vice president for market services, told the annual mid-winter convention of the Philadelphia Security Traders Association.

Currently, 150 Nasdaq stocks are subject to an actual-size rule, allowing traders to quote these stocks in minimum trade sizes of 100 shares. The NASD had proposed the elimination of the 1,000-share minimum quote-size rule on all stocks as a natural consequence of the order handling rules. The proposed new Nasdaq trading system, in fact, may hinge on traders being allowed to quote all stocks in minimum trade sizes of 100 shares.

Nasdaq made it clear that if artificial quote-size requirements on all Nasdaq securities are not eliminated ahead of a new integrated order-delivery and execution system, some order-entry features of the facility would not be appropriate.

Campbell said in an interview during a break at the Philadelphia convention that approval of the NASD proposal "will enable a trader to manage the risk, manage the quote, with one more dimension and that's size other than just price."

He added that the SEC so far has been supportive about the proposal, requesting a considerable amount of information from the NASD as it pursues its petition.