Lawrence Leibowitz, group executive vice president and head of U.S. markets and global technology for NYSE Euronext, spoke at the annual Securities Industry and Financial Markets Association market structure conference in May.
On the floor–
You are going to see us rolling out trading superbooths on the floor, where you can actually operate a full trading desk on the floor of the stock exchange, not sit on those stools and operate a desk from a decrepit booth that, to be honest, is a relic. That will allow firms like Rosenblatt and many others to continue to revitalize their business and, in fact, attract new business to the floor. It’s just a different business. The guys who are sitting there waiting for the old business to come back–it’s not coming back. On the other hand, that doesn’t mean that the floor is dead.
On disclosure by dark pools–
Our market structure has gone astray. Over the past 15 years the order-handing rules, decimalization and Reg NMS were all designed to increase transparency, level the playing field and encourage limit-order display. We now live in a completely fragmented market, with 50 or so dark pools, 10 or so exchanges and liquidity displayed to privileged participants. Liquidity has been driven underground, and there is a privileged club of people who get to see orders before the marketplace as a whole. We welcome the SEC’s comments toward looking at order-handling practices, looking at ATS practices, looking at surveillance, because the truth is, we need disclosure. We need good surveillance, because when information is leaked out of the marketplace in a non-level-playing-field way, we need to be really careful about that.
On striking a balance–
We need to be sure we don’t harm the competitiveness and the innovative nature of our market. No one would argue that the duopoly we had in 1998 or 1995 was better than what we have now. So I think the question is: How do we strike the balance between heavily structured, high-barriers-to-entry monopolies and anarchy? Because the best-execution definition can really be stretched to govern almost any practice that someone wants to justify. I think it’s a good time, particular at this time in the market, to just revisit ATS and order-handling practices. Not to say that what is happening is criminal, but more just to say–just as Reg NMS was a chance to really look at market structure–that this is a chance to look at the new world we are in, and how do we fix some of the practices, and where are the lines? Because I don’t know that most of us know where the lines are.
On regulation of short selling–
I think we all have gotten to the point of saying that we just need a decision. Obviously, nobody wants the market harmed, but we need a decision so we can move on with our lives.
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