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September 30, 2004

Fidelity on NYSE Plan: Plain English!

By Gregory Bresiger

The New York Stock Exchange hybrid plan is "so prolix that it seriously impedes the ability of investors and other interested persons to understand the proposal."

That's according to Eric Roiter, senior vice president and general counsel for Fidelity Investments.

Indeed, Fidelity officials complain that the filing is a just a way of obtaining fast market status for part of the Big Board.

"In turn, that would bring the NYSE within the protection of the trade-through rule, if the commission adopts the rule," Roiter charges in a hard-hitting comment letter to the Securities and Exchange Commission. Allowing the NYSE to do so, the Fidelity executive adds, would have implications for all markets. Trade-through reform would, as proposed by the NSYE, give the Big Board an "advantage" over other market centers, according to Fidelity.

The mutual fund behemoth is now asking that the NYSE hybrid plan be re-filed with a "plain English attachment." It also wants the NYSE to show how the proposed limited, automated system of bids and offers on the NYSE specialist book would work.

One example offered by Fidelity: "Should [the NYSE] show how the undisclosed trading interests of floor brokers and specialists could be included in a sweep of the limit order book, and the impact this can have on displayed public limit orders that may thereby be excluded from receiving execution." Fidelity also requests that the regulators require the NYSE to hold a public hearing on the plan. It says that "interested persons could offer their views on the proposal."

An NYSE spokesman declined comment on the Fidelity letter. A floor broker told Traders Magazine that, "frankly, no one cares about what Fidelity said to the SEC. The exchange's job is to come up with a proposal that makes sense for the SEC and Fidelity really isn't a factor in this."

(Full Fidelity letter on