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April 21, 2005

Donaldson: Trade-Through Rule Essential

By Gregory Bresiger

Mend it. Don't end it. That's the essence of SEC Chairman's William Donaldson's recent testimony to Congress on the controversial trade-through reform plan.

"The trade-through rule that the Commission has proposed is pro-competitive - in the best tradition of the market reform initiatives that the Commission has spearheaded over the past several years," Donaldson told the U.S. House of Representatives Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

Donaldson said the debate over the rule, which came to a head recently, had often been waged by "vested interests" concerned about competition between markets. However, the needs of the individual investor have been lost.

"The investor who is willing to post a limit order supplies liquidity to the marketplace. The limit order shows the market where the trading interest lies and helps to establish the best prices for stock trading," Donaldson said. "This investor provides a public service, and the market as a whole benefits."