The Securities and Exchange Commission has put off making a decision to approve or disapprove a request by the New York Stock Exchange to allow it to share customer information with its designated market makers.
In a filing last week, the regulator gave itself 45 more days to rule on the NYSE proposal.
Two years ago, the NYSE proposed changing its Rule 104 to allow its DMMs, formerly known as specialists, to gain access to NYSE systems that held the names of broker-dealers that had traded shares at the exchange. The purpose was to allow the DMMs to share that information with other floor brokers in hopes of promoting more trades, particularly sizable ones.
Such authority is not new. Before Regulation NMS went into effect, and the NYSE floor was a busier trading center, NYSE specialists had the authority to pass on the identities of brokers to other brokers.
Last year, the SEC turned down the NYSE’s request, saying it found no value in it. This April, the NYSE again tried to win approval for its proposal, providing more information about current trading practices. Last week, the SEC put off making a decision until July 26, saying it needed more time.
The proposal has the support of academics and practitioners alike. Jim Angel, for example, a visiting professor at the University of Pennsylvania’s Wharton School, urged the SEC to approve the proposal. “Bringing back this ability for the DMM to act as a match maker could improve execution quality, especially for large buy side institutions like mutual funds that trade on behalf retail investors like me,” he told the SEC last month.”
