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February 18, 2010

FINRA Proposal Riles OTC Market

By Peter Chapman

STANY and others maintain the QCF will act to discourage any competition for Pink OTC's interdealer quote service. That would give Pink OTC a monopoly, which could lead to higher costs for market makers. "The QCF can be viewed as anti-competitive and a disincentive to innovation and improvement in the OTC equity market," STANY told the SEC.

Nick DeMaria, managing director of equities trading at discount brokerage StockCross Financial Services, agrees. "It will stymie any and all competition from even attempting to enter the marketplace," he said. "If this is approved and FINRA is allowed to overstep its bounds, no one will enter the marketplace and try to compete with them." DeMaria does not believe FINRA has the authority to create the QCF.

Dealers are also upset over the $4 per security per month fee they will have to pay. "Why, as a dealer, should I pay an inflated price to a regulatory body to do something that is already being done?" DeMaria asked. "The smaller firms forced to pay these fees are going to suffer."

FINRA would not comment for this article.


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