Commentary

David Weisberger
Traders Magazine Online News

Stop the BS & Promote Real Transparency!

In this shared blog, David Weisberger says a recent WSJ article is wrong and that traders do need to purchase faster and more comprehensive market data to avoid being fined for violating "Best Execution" obligations.

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July 31, 1999

At Deadline

By John A. Byrne

Times Sign

Nasdaq has won an arbitration battle to erect the largest video screen in the world - an eight-story, 14,000-square foot structure wrapped around the new Conde Nast skyscraper in New York's Times Square. Nasdaq successfully fought off objections from S.I. Newhouse. The publishing baron complained that the huge blinking sign would obstruct the view inside the 48-story tower, where some of his magazines will have headquarters.

A new marketing office and glass-framed television center for Nasdaq is taking shape in the floors just below the sign. Altogether, the project makes a strong marketing statement by Frank Zarb, chairman of the National Association of Securities Dealers, Nasdaq's parent. He believes the sign will attract valuable public attention at the crossroads of the world.

Nasdaq said it will use the sign, costing about $25 million to erect, to display stock quotes and financial news as well as information about its listed companies.

Easdaq

Easdaq, the pan-European electronic stock exchange struggling to catch up with the more traditional stock markets in Europe, has new investors. New Jersey's Knight/Trimark Group, the largest Nasdaq wholesaler as measured by shares executed, is acquiring an 18.92 percent stake for roughly $8.2 million. Investment banking giant, Morgan Stanley Dean Witter & Co. is taking a 2.44 percent stake while another big investment bank, Goldman, Sachs Group is taking a 1.22 percent stake.

Non-U.S. outfits joining the group of backers are Crea Invest, a venture-capital investment group based in Denmark and London's Tradepoint Financial Networks. Easdaq will raise $24.5 million in the round of funding.

The fundraising comes as Easdaq aims to remake itself to attract secondary listings and appoints Steffan Schubert as the exchange's new chief executive. He replaces Jacques Putzeys, who will remain fulltime as head of the Easdaq's market authority. He previously held the post as part of his chief executive and other responsibilities.

Delisting

The National Association of Securities Dealers is strongly opposed to pending changes in a rule that will make it much easier for public companies on the New York Stock Exchange to delist. At issue is Rule 500, which states that companies must obtain a two-third majority vote of its shareholders, with no more than 10 per cent opposing, before it can bolt from the Big Board. Under the amendment, which was proposed by the Big Board partly as a result of objections to an earlier version by the NASD, a company can voluntarily delist with a majority vote of its board. The company also must have approval from its audit committee and notify 35 of its largest shareholders of record.

"We thought that the NYSE would do the right thing and eliminate the rule altogether," said Frank Zarb, chairman of the NASD, "but now that that hasn't happened, the courts or Congress may be needed to force real reform on such an outmoded rule."

Best Execution

Retail broker dealers that send their orders to Nasdaq wholesalers have lashed out at the Securities and Exchange Commission over the agency's campaign on best execution. Brokerages, generally, are not disputing the propriety of providing customers with a fair execution. But they are concerned that the SEC is overly focusing on price improvement as the appropriate mechanism for best execution. Many attendees at a one-day forum in Chicago on best execution, sponsored by Jersey City-based wholesaler Knight Securities, questioned that standard. These attendees felt that the immediacy of a fill and fills in sizes greater than those subject to the NBBO, provide a better measure of best execution.

Meanwhile, tempers are rising as the SEC steps up its activities on best execution. "We noticed an increase in SEC scrutiny in February," said Alan Shapiro, president of the Transaction Auditing Group, a Northport, N.Y.- based firm that provides trade-auditing services. "I think it will only get more intense," added Shapiro, who addressed the Chicago forum. "Now it's happening in the upper tiers. Soon it will trickle down."