|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
The Securities And Exchange Commission's Regulation National Market System (NMS) Will Result In An Architectural Overhaul
Staff Writer – Securities Industries News
Securities Mosaic. November 21, 2005
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EXCERPT: The Securities and Exchange Commission's Regulation National Market System (NMS) will result in an architectural overhaul of U.S. markets that would not be possible without the technology developed since the 1996 order-handling rules. That technology, however, has been developed to meet the needs of individual users, often resulting in one-off solutions that were not compatible with others. The need to address "messaging fragmentation" will become more critical amid more uniform, interconnected markets. With the clock ticking toward the phase-in of Reg NMS beginning in April 2006, "there is a need for standardization across data feeds," said Michael Lurie, VP of JP Morgan Chase, at FIX Protocol Ltd.'s (FPL) electronic trading conference in New York earlier this month. "It's been coming up within FPL, along with the need for standardization across FIX implementations as well as the potential for standardization with trading venues." At the same time, regulatory fiat is combining with the evolution of electronic trading to make automation essential for compliance. "What hybrid trading and Reg NMS both anticipate is demand for increased messaging capacity with respect to market data feeds," said Manisha Kulkarni, executive director of the Financial Information Forum (FIF). "The new intermarket sweep order' defined in Reg NMS is something that order-routing systems will have to cope with and contain information about as execution occurs under the order-protection rule. This is one area where FIX is taking a leading role in terms of the order identifier that is expected to be added." These enhancements may lead to new messaging demands beyond what regulators require. "Order types other than internal sweeps may come about in addition to hybrids and Reg NMS," said Kulkarni. "Vendors can't just think in terms of Reg NMS." The users of trading connectivity, and the vendors who build it, find themselves in the unfamiliar position of having to meet regulatory demands that are falling on their users. With less than a year to go, the industry is still trying to find solutions. |
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