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December 1, 2003

STA: Fix the National Market System

By Gregory Bresiger

The goals of an effective National Market System (NMS) have not been achieved, warned John Giesea, President and CEO of the Security Traders Association, in recent testimony before Congress.

Transparency

The NMS was supposed to provide quotation transparency and improved market linkages, but these things have not happened, Giesea told members of a subcommittee of the House Financial Services Committee.

The problem? Regulators and lawmakers haven't moved fast enough.

"In some cases, the rules and regulations that govern the marketplace have simply not kept pace with the forces that are transforming our equity markets, including, among others, advances in technology," Giesea added.

The STA, in its package of proposed market structure reforms, is asking that markets that trade "like securities" have standardized rules and that controversial ECN access fees be banned.

It is also calling for the creation of "neutral, effective market linkages for Nasdaq and exchange listed securities that, among other things, employ state-of-the-art technology and provide for automatic or immediate execution of orders." The STA has published a white paper on market structure with recommended reforms.