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December 1, 2000

Last Minute SuperMontage Move? Sen. Phil Gramm Issues New Plea for a Fair Trading Facility

By William Hoffman

Also in this article

  • Last Minute SuperMontage Move? Sen. Phil Gramm Issues New Plea for a Fair Trading Facility

The debate over Nasdaq's SuperMon tage order display facility has a newly emboldened participant: Senate Banking Committee Chairman Phil Gramm (R-Texas).

Sen. Gramm has reiterated his plea that the SuperMontage should not hinder competition.

"He wants to make sure that [the SuperMontage] doesn't become a monopoly, and block the competition that could be provided by some of the electronic communications networks," said Banking Committee spokeswoman Christi Harlan.

"As long as you've got a system where you're not only displaying prices, but also the means of executing trades," she added, "it runs the threat of pushing competitors out of the business."

November Elections

Gramm spoke with securities industry pros about the SuperMontage proposal in the weeks leading up to the November elections. Gramm also has successfully appealed to the Securities and Exchange Commission for extensions of comment periods on the SuperMontage.

A spokesperson for the National Association of Securities Dealers tersely replied, "no comment" when asked about Gramm's seemingly intensified interest in the SuperMontage.

The spokesperson did say, however, that the proposal enjoyed bipartisan support in the 106th Congress, and expressed confidence that the SEC would eventually approve the plan.

Meanwhile, an SEC spokesperson noted that Chairman Arthur Levitt and others on the commission have repeatedly called the SuperMontage a top agency priority.

The spokesperson said there was no telling when the full commission would vote on the SuperMontage. "Some rules are more complicated than others, so the amount of time it takes to review and analyze it depends on how complex it is and how many comments there are," the spokesperson said.

Annette Nazareth, director of the SEC's division of market regulation, told reporters after a recent industry conference in New York hosted by the Investment Company Institute, that the agency will take care in its decision but that it will be made "promptly."

Nasdaq recently submitted an eighth amendment to its proposal in response to SEC comment letters, most notably from ECNs.

The new amendment gives ECNs an opportunity to compete more directly with market makers for investors' orders. The amendment ensures that ECNs can display prices without having to incorporate their access fees in the display.

That was enough for Bloomberg Tradebook, an ECN that had long opposed the SuperMontage.

"Now market participants can choose whether and how to access liquidity in Nasdaq," Bloomberg President Kim Bang said in a statement.

"This successfully addresses the problem of discrimination against ECN customer limit orders that flowed from the flawed order matching and sweeping algorithm priorities of the original proposal... Choice has replaced the monopoly of the original proposal."

Welcome Aboard

Andrew Madoff, director of Nasdaq trading at Bernard L. Madoff Investment Securities, welcomed Bloomberg's switch. "We're glad to have them aboard," he said.

Of the eight amendments tacked onto the original Nasdaq plan, Madoff said, "I think they make the final filing even better." He added that he hoped the eighth amendment would convince other ECNs to abandon their opposition to the SuperMontage.

But both Archipelago ECN and Instinet, a unit of Reuters Group PLC, issued statements reiterating their opposition to the Nasdaq plan.

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