Commentary

Elaine Wah

Modern Markets, Modern Metrics - A Blog By IEX

In this blog by IEX's Elaine Wah, the newest public exchange looks to refute public claims that the metrics it uses are designed to inflate its own volume numbers and mislead people.

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Should have had a pilot program a long time ago.

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March 1, 2004

A Radical Proposal for Nasdaq Market

By Gregory Bresiger

The mother of all market structure changes, part of a package which has been proposed by the Securities and Exchange Commission, is guaranteed to keep a widespread debate alive in the trading industry.

Under the changes, the controversial trade-through rule, which governs intra-market order handling, would be both expanded and weakened.

The SEC wants to extend the rule, which currently applies only to the listed market, to Nasdaq. The proposal calls for a uniform, national trade-through rule.

Despite broadening the rule's coverage, the SEC wants to set limitations on how and when it is applied.

First, market centers would be designated as "fast"- those offering automatic executions - or "slow"- those that don't. Fast markets would not be permitted to trade through fast markets, but could trade through slow markets.

Second, the SEC will allow traders to consider a de minimis exception when trading through slow markets. Depending on the price of the security, traders would be allowed to trade through a slow market if it had the best price by up to five cents per share.

Third, the SEC would permit traders to opt out of any trade through restrictions on a case-by-case basis.

Besides trade through, the SEC also proposed a ban on sub-penny trading; a cap on ECN access fees of one-tenth of a cent per share; allowing Nasdaq market makers to charge access fees; and a change to existing tape revenue sharing arrangements.