January 14, 2005
United States Securities and Exchange Commission
Re: File No. S7-10-04 Proposed Rule on Regulation NMS
I have the following comments regarding regulation NMS:
1. I fully support the implementation of the trade through rule that protects the depth of book for automated quotes.
If the SEC successfully pushes the price priority across markets for the depth of books, perhaps future efforts will
be made to enforce time priority also.
2. The current market structure favors intermediaries at the expense of the long term investor be it large or small.
The most vocal opponents of the depth of book protection are intermediaries that profit from the unfairness
of the current market structure. I am confident the SEC can see through this lobbying and will do the right thing.
3. There is no economic basis that justifies the informational and transactional advantage of the floor.
Examples of unfair practices are: withholding or delaying depth of book quotation data, delaying fills or cancels, ability to select the order flow with which to interact by price improving.
4. The lack of time priority in some markets is unfair and exists only for allowing their members to internalize order flow.
5. I do not agree with a minimum quotation increment of 1 cent. The minimum quotation increment makes sense only if the price and time priority were enforced across the markets, i.e. we had a true CLOB. Given that that will not be the case even in the most optimistic implementation of the regulation NMS, the SEC should allow sub penny quoting.
Thank you very much,