December 17, 2004
I am an MBA student @ Case Western Reserve Universitys Weatherhead School of Management and concentrate my studies on e-business technologies. I am also a very active investor. Please find below my comments regarding the recently revised Regulation NMS.
1 Expanding the trade-through rule to the OTC marketplace is bad - bad because it interferes with the speed of execution and undermines the advances that the OTC marketplace has made over the years in terms of speed and best-price execution. ITS IMPORTANT TO MAINTAIN A WORLD-CLASS, INNOVATIVE, AND FAIR MARKETPLACE. THE US NEEDS TO BE A MODEL MARKETPLACE FOR BOURSES THROUGHOUT THE WORLD. THE AGE-OLD OPEN OUTCRY SYSTEM THAT IS THE NYSE IS ABSURD. IF THE LONDON STOCK EXCHANGE COULD BREAK THEIR CENTURYS-OLD TRADITION OF AN OPEN OUTCRY SYSTEM AND REPLACE IT WITH AN INNOVATIVE, FAST, AND FAIR SYSTEM THE NYSE SHOULD BE ABLE TO FOLLOW SUIT.
THERE ARE CLEARLY DEEP RELATIONSHIPS BETWEEN EXECUTIVES AT THE NYSE AND POLICY MAKERS - THESE RELATIONSHIPS ARE CONFLICTING AND ARE THE CAUSE FOR MANY RULES THAT GET OVERLOOKED.
2 The SEC needs to ENFORCE the existing trade-through rule for the NYSE. As it currently stands, the specialist is the only one thats guarenteed the best price -- NOT THE PUBLIC.
AS FOR THE BELLY-ACHING OVER THE COSTS ASSOCIATED WITH PUTTING A SYSTEM IN PLACE THAT COULD SEEMLESSLY AND QUICKLY SEARCH ALL US MARKETS FOR THE BEST PRICE IS HOGWASH. ARCHAPELAGO HOLDINGS INC, WHO RELPLACED THE FLOOR-BASED SYSTEM OF THE PACIFIC EXCHANGE WITH A TECHNOLOGICALLY SUPERIOR ONE HAS SUCH A SYSTEM. IF ARCAEX WERE TO BE THE ONLY SYSTEM USED AND SERVE AS A MARKET FOR MARKETS, STAKEHOLDERS IN THE EXISTING READ: ARCHAIC SYSTEM WOULD CLEARLY STAND TO LOSE -- THATS PART OF THE REASON THEY ARE THE MOST OUTSPOKEN ABOUT THE SEC NOT MANDATING CHANGES WHICH MODERNIZE THE US CAPITAL MARKET SYSTEM.
AS THE SEC, YOU HAVE A RESPONSIBILITY TO FOSTER INNOVATION WHILE LOOKING OUT FOR THE GENERAL PUBLIC. TO BE SURE, THE SEC HAS LARGELY FAILED IN THIS DUTY THROUGH THE YEARS.
WHILE THE MEDIA PUBLISHES STORIES ABOUT SPECIALISTS AND FINANCIAL INSTITUTIONS BEING FOUND GUILTY OF MALFEASANCE, THE SEC HAS SOMEHOW MANGAGED TO KEEP OUT OF THE SPOTLIGHT -- THESE PRIVATE SECTOR ACTS WOULD NOT BE POSSIBLE IF THE SEC DID THEIR JOB. IF A POLICE DEPT. DOES NOT ENFORCE SPEED LIMITS, AND ACCIDENTS HAPPEN AS A RESULT OF SPEEDING, THE POLICE DEPARTMENT HAS NOT ONLY FAILED IN ITS DUTY, BUT THEYVE LET DOWN TAXPAYERS AND HURT THE PUBLIC BY NOT HELPING IT - THIS IS THE WAY THE SEC HAS HANDLED ENFORCING SUCH RULES AS THE TRADE-THROUGH FOR THE NYSE.
PLEASE VISIT ARCAEX.BLOGSPOT.COM FOR MUCH MORE ABOUT WHAT MAKES ARCAEX A GREAT MODEL AND WHY THE CURRENT SYSTEM NEEDS TO BE OVERHAULED.