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November 1, 2012

SIFMA Blasts NASDAQ Plan

By Editorial Staff

The Securities Industry and Financial Markets Association opposes a Nasdaq OMX Group plan to offer algorithmic trading services to its members.

In a letter to the Securities and Exchange Commission, SIFMA, which represents institutional brokers among others, told the regulator it is concerned about a national securities exchange offering a service that competes with similar services provided by broker-dealers.

Under its proposal, the Nasdaq Stock Market unit of the exchange operator would offer "benchmark orders" that simulate three common trading strategies.

The initial benchmarks are designed to match the Volume-Weighted Average Price of a stock, the Time-Weighted Average Price or a defined Percent of Volume of trading in a stock.

Institutional brokers have been offering benchmark algorithms for years.

"The Commission should disapprove Nasdaq's proposal" to offer such benchmark orders, SIFMA associate general counsel Theodore Lazo told the SEC.

SIFMA contends that Nasdaq might get regulatory advantages over brokers that provide the same service.

Nasdaq filed its algo proposal with the SEC in May.

 

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