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In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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July 5, 2006

SEC's Glassman Going, Going...

By Gregory Bresiger

A critic of the new trade-through rule is leaving the regulatory world.

Securities and Exchange Commissioner Cynthia Glassman, a harsh critic of Reg NMS, hedge fund registration and over-regulation, recently announced she would soon resign.

Glassman, along with fellow commissioner Paul Atkins, became famous last year for dissents on the Reg NMS/trade-through rule, which was passed by a 3-2 vote. In a minority opinion, she insisted that the rule was not needed.

"The ultimate goal of Regulation NMS is to make sure buyers and sellers of stock meet at the most advantageous price for each of them. That is an excellent goal, but one that does not require this rule," Glassman said at the SEC meeting that finally passed Reg NMS last year.

She argued that best execution standards, better connectivity and fair access standards would accomplish more than the extension of the rule. Glassman said those factors were already present in electronic markets like the Nasdaq, which she called "a robust and competitive market."

Glassman's term ends June 5, although she might stay on for six months past that date until a successor, who must be a republican, is appointed. The commission must have three members from the majority party and two members from the minority party.

Reg NMS also includes new rules on sub pennies, market data revenue and access.

But, in part because of complaints of its complexity, the SEC will be delaying the implementation of the trade-through rule from June 29 to sometime next year.

Glassman, an economist and an academic, served as acting chairwoman of the SEC in the summer of 2005.

Appointed to the SEC in January 2002, Glassman's tenure has been characterized by her push for the increased use of economic analysis in SEC rulemaking. She is expected to return to the academic world.