The following comment on Letter Type K,
Letter Type K:
January 11, 2005
The Honorable William Donaldson
Dear Chairman Donaldson,
The matter of Regulation NMS is currently being addressed by the Securities and Exchange Commission. Rejecting the concept of a consolidated limit order book is central to retaining the integrity of our markets and our position as the premier capital marketplace in the world.
The comprehensive National Market System proposal now before the SEC deals with topics of inter-market competition, quotation dissemination and many other market structure issues critical to ensuring future capital formation while fairly meeting the needs of the investors whom our markets serve. Central to the issue of Regulation NMS are two alternatives regarding marketplace quotations of equities. One alternative is that of protecting the "best bid and offer" in each market center. This concept enhances competition, allows for price negotiation, encourages innovstion, and treats all market participants fairly and equally. This "best bid" quotation, currently in place, has allowed our domestic equity markets to thrive and be the most efficient in the world. The other quotation alternative, a virtual consolidated limit order book would serve to fragment markets, discourage price competition and essentially nationalize our equity markets by eliminating the ability of market participants to competitively price their securities by denying fair access to the most efficient pricing mechanism for investors.
The concept of a consolidated limit order book has been rejected in the past by both Congress and the SEC. I urge you to once again reject this idea as counterproductive to the effectiveness of the most efficient securities market in the world.