X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In comments with ominous implications for the Securities and Exchange Commission’s proposal to reform the nation’s stock markets, a key lawmaker condemned a critical component of its plan as “the worst public policy I have seen proposed for the markets during my entire tenure in Congress.” Speaking at a congressional hearing on the SEC’s proposal for revamping the National Market System, Rep. Richard Baker, R-La., chairman of the House Subcommittee on Capital Markets, lashed out against a component of the plan that would extend the so-called trade-through rule to all U.S. equity markets. Currently in force only on the New York Stock Exchange, the 30-year-old trade-through rule bars brokers from bypassing the best price offered for a stock when executing an order. That effectively routes many orders placed on other exchanges to the NYSE. The SEC says extending the rule would give brokers access to the best quotes across all markets that are on automated execution systems. They would not have to access quotes that are available only on the slower, broker-driven NYSE floor. The nine-term congressman said the rule should be eliminated, calling it “anticompetitive and anti-investor” as well as a “relic of a bygone era” that serves only to preserve the NYSE’s 80 percent share of U.S. trade in listed securities. “Extending the rule to other market participants makes no sense,” he said. Testifying before Baker’s committee, SEC Chairman William Donaldson said the rule aims fundamentally to protect investors. “This simple point can get lost in all of the sound and fury unleashed by vested interests for whom a marketwide trade-through rule would require new ways of doing business,” he said. Donaldson also said that the rule promotes competition and that much of the debate over it has focused on competition between markets rather than competition between investors for order execution. “Both kinds of competition are essential for vibrant and healthy markets,” he said. The SEC proposal is an attempt to reconcile the demands of large institutions for faster trading using automated systems with a long-standing market principle that investors should get the best price possible for their orders. While it normally acts independently, the SEC answers ultimately to Congress, which could respond with legislation to kill or modify its reform proposal. Any such effort would most likely begin with Baker’s committee. Copyright �2005 TDD, LLC. All rights reserved.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.