|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
No More Breaks For The Big Board
Staff Writer
Business Week. December 6, 2004
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EXCERPT: For months the Securities & Exchange Commission has held the New York Stock Exchange's feet to the fire. The SEC's agenda: force the Big Board to lower the barriers to competition from rival electronic markets -- without undermining the nation's premier financial market. NYSE Chief Executive John A. Thain has responded with plans to beef up the New York market's puny e-trading system. But the SEC believes those plans aren't adequate -- and the agency is now countering with a proposal to turbocharge the automatic matching of buy and sell orders in ways that would force New York to go much further. At issue is a basic change in how stocks are traded. For years, big investors such as mutual and pension funds have complained that the Big Board uses the so-called trade-through rule to stymie their trading. The rule's purpose is to ensure that investors get the best price available on all markets for stock they buy and sell. Frequently, the NYSE shows the best price. But too often, institutional investors argue, the slow pace of the NYSE's open-outcry auctions means that the displayed price is gone by the time an order actually gets to the exchange. The institutions miss out on the best price -- and can't send their order to a competing market that could fill it at a slightly inferior price, but at lightning speed. The SEC is due to vote on Dec. 15 on a final staff plan. Some big investors want the SEC to scrap the trade-through rule and let them complete trades in whichever market they choose. But Chairman William H. Donaldson, a former NYSE chief, believes investors should always get a shot at the best price. So he's pushing the Big Board to expand its limited system for matching buyers and sellers automatically. Thain has proposed that when the NYSE has the best price, it fill the order with whatever shares are available at that price. If the order is too big to fill, the NYSE will provide shares available on the exchange at next-best prices. |
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