|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
SEC Proposes Best-Price Rule In Stock Trades
Staff Writer
Los Angeles Times - Washington Post. December 16, 2004
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EXCERPT: Federal regulators proposed a new rule Wednesday that would rank price over speed in buying and selling stocks. The Securities and Exchange Commission submitted the proposal to a 30-day public comment period. The commission had planned to vote on the proposal Wednesday as part of a broad package of stock trading rules but decided instead to "go beyond our statutory obligations and give all interested parties" time to review it, SEC Chairman William H. Donaldson said. An investor's right to the best stock price available is a long-standing doctrine in securities markets, applying to sellers who seek the highest price and buyers who seek the lowest. Earlier this year, the SEC staff suggested giving traders the option of rejecting the best price if their clients preferred a fast deal. The Nasdaq and other automated exchanges pushed for that change. They can execute trades many times faster than the New York Stock Exchange and the NYSE auction system, which relies on floor traders linking buyers and sellers. And some institutional investors supported the change, saying that by the time the NYSE gets around to executing a trade for a large number of shares, the "best price" may have disappeared. The NYSE -- which uses best price as one of its strongest selling points -- fought the change and the SEC staff decided to rewrite the proposal.
Under the latest plan, the rule requiring brokers to get the best possible price would apply to all stock markets and nearly all types of trading orders, assuming that they could be filled electronically. In addition, brokers would be required to "sweep" all the markets to find the best possible price. |
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