August 10, 2007
We understand that there are five major difference differences between the NASDAQ (also supported by the NSX, PHLX, CHX and NASD) and the NYSE Symbology Plans (also supported by the AMEX) filed with the SEC:
1. Scope — The NASDAQ plan covers all stock and exchange-listed option symbols of 1 through 5 letters in length. The NYSE plan only covers 1-, 2- and 3-letter symbols.
2. Equality — The NYSE’s plan gives the NYSE and the AMEX preferential rights compared to other exchanges:
The NYSE plan justifies this by asserting that they have historically reserved more symbols than other exchanges and they don’t want exchanges reserving symbols unnecessarily. In this way they seek to preserve the status quo, thereby enhancing their competitive advantage over other exchanges in the system.
We have a view that NASDAQ’s plan gives all exchanges equal rights. Rather than limit an exchange’s rights under the plan, constraints on symbol reservation abuse are:
a. A requirement that an exchange have a "reasonable basis to believe that they will use any symbol they reserve in the next 24 months" before reserving one.
b. A cost allocation methodology solely based on how many symbols you reserve. So if you reserve a high number of symbols, you pay a higher cost.
We therefore support NASDAQ
We also understand that following:-
3. “Legacy Reservations” — The NYSE plan proposes that if an exchange claims to have a symbol already reserved, it is theirs, no questions asked. The NASDAQ plan argues that no exchange should “own” a symbol based solely on a prior claim — everyone starts with a level playing field.
We support NASDAQ plan
However, the NASDAQ Plan does recognize the need for “legacy reservations” because some previously reserved symbols may be close to being used — a company two weeks away from an IPO or an index option close to roll-out — that should not be jeopardized by the institution of the symbology system. Accordingly, we have proposed a transitional provision allowing for an exchange to assert a legacy reservation for up to 12 months for a pending use.
We understand that
4. Costs — The NYSE Plan would allocate initial and ongoing costs equally among all participating exchanges. Early estimates of these costs are up to $250,000 or more. As such, the NYSE’s proposal places a disproportionately high share of these costs on the smaller more cost-sensitive exchanges that do not reserve symbols. The NASDAQ Plan would institute a completely usage-based cost-allocation methodology. If an exchange does not reserve any symbols, they would not pay anything for the system.
5. Portability — The NASDAQ Plan proposes universal symbol portability so that if a company switches from one SRO listing market to another, the SRO that is newly listing the company can use their existing symbol. The NYSE plan would give the exchange losing the listing a “veto right” over portability meaning the company could only keep their existing symbol if the market they are leaving gives them permission to keep it.
Sobha Developers Ltd