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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November 8, 2005

At Deadline

By Editorial Staff

Thain Speaks

*The New York Stock Exchange will file a seventh amendment with the Securities and Exchange Commission for its proposed hybrid market plan just a few days after filing amendment six, NYSE chief executive John Thain announced. His comments came at a recent conference of the Investment Company Institute, the fund industry's trade organization.

Thain Speaks

*The New York Stock Exchange will file a seventh amendment with the Securities and Exchange Commission for its proposed hybrid market plan just a few days after filing amendment six, NYSE chief executive John Thain announced. His comments came at a recent conference of the Investment Company Institute, the fund industry's trade organization.

In defense of the hybrid plan, Thain said Big Board officials are trying to accomplish several things: Preserve a price-improvement system, respond to requests from those who want to trade electronically at the NYSE and update the current trading system, which recently reached three billion shares in a day last month.

Thain said the NYSE needs to become a more electronic market so that it can continue to respond to requests from those who want to trade electronically at the Big Board.

"We can barely keep up now," Thain stated in public comments. "There's no way we could trade six billion shares a day under the current setup."

However, he dismissed those who want the NYSE to eliminate the floor and its use of specialists.

"We're not going to turn the NYSE into an ECN. There are people who think we should do that, and I'm here to say that isn't going to happen," he said. Thain said the hybrid will also retain the role of the specialist in supporting the market.

Soft Dollars Narrow

*Greater disclosure and more rules in the use of soft dollars for products and services. That was the essence of an interpretative release on soft dollar rules changes that the SEC was about to publish as Traders Magazine went to press.

"The commission is going to narrow the definition of what is an acceptable soft dollar arrangement," said Gene Gohlke, associate director in the SEC's Office of Compliance, Inspections and Examinations at an ICI conference.

However, he emphasized that the new rules will "equally apply to third-party and proprietary research." A product or service, to qualify as a soft dollar expense, must have "intellectual or information content," Gohlke said.

"Services that would not have intellectual content would be hardware or a telephone line." A qualified expense must provide "lawful and intellectual assistance for the client."

Commissioner Says Reg NMS Is Working

*The regulatory certainty that came from the final passage of Reg NMS already has dramatically changed the markets, said a former SEC staff director.

" I do believe that the SEC's action has unleashed new competition," said new SEC Commissioner Annette Narazeth in addressing a recent ICI conference.

Regional exchanges have become more competitive and "there is now discussion of the formation of one or more new ECNs," Narazeth said. As the former director of the SEC Division of Regulation, she was one of the key staff members who helped mold Reg NMS.

Narazeth said these market structure developments would not have happened without the NMS implementation process now taking place. Indeed, at the same ICI event, Nasdaq Chairman Robert Greifeld, joined in the call for prompt implementation of the market structure plan. "It's a good time to move forward."