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Spoofing, Surveillance and Supervision

Jay Biondo, Product Manager - Surveillance at Trading Technologies, co-authored an article along with James Lundy and Nicholas Wendland, both of Drinker Biddle & Reath LLP, reviewing the CFTC's regulations and expanding efforts, 21st century surveillance and supervision, as well as strategic recommendations.

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April 30, 2003

Archipelago: Nasdaq Can Blame Itself

By Gregory Bresiger

Nasdaq's current cost problems mostly have been caused by its regulatory woes from the 1990s and the unexpected costs of SuperMontage, Archipelago officials told Traders Magazine. And Archipelago attorneys Kevin O'Hara and Janice Angstadt also said they plan to file a reply to the Nasdaq SEC petition. That petition seeks equal surveillance and enforcement of uniform trading rules.

"Many of these costs come from the huge settlement they had to make with the SEC because of the price-fixing scandal in the 1990s," O'Hara said. He said that the SEC settlement - besides a one billion dollar fine - required Nasdaq to upgrade their audit and control systems.

"They have been committed to spending $100 million over five years. But again that is because of the problems they had, not because of the competition," according to O'Hara. Both attorneys also questioned if Nasdaq's model is going to be effective against the many potential new venues that will offer trading executions in OTC stocks.

"Some of what they're complaining is simply competition," Angstadt said. "They're losing 50 percent of their business as more competitors take away business," she said. And both attorneys warned that, if the regulators approved a request that other venues adopt Nasdaq's regulatory model, it would result in endless problems in the trading industry.

"It would cause widespread protests. It would means lots of potential lawsuits," O'Hara warned.