November 17, 1998
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: Proposed Regulation ATS (File No. S7-12-98)
Dear Mr. Katz:
I am writing to express my concerns regarding the institutional order display requirement that the Commission has proposed as part of Regulation ATS. As someone who has executed institutional orders for over thirteen years, I agree with the basic goal of increasing liquidity for all investors, yet I believe that forcing all institutional orders to be displayed in the public quote line will hinder rather than advance that goal.
My trading strategies are tailored to the particular situation and security being traded, and I frequently use electronic upstairs trading facilities for my larger orders. If these orders were regularly displayed on SelectNet or SOES, they would drive the quote and in my opinion we would obtain worse executions for our customers. This would be to no one’s benefit (except possibly the SOES bandits).
I frankly don’t know how we would achieve best execution if I no longer had the option of sending upstairs orders to electronic brokers. Presumably I would have to give the orders to dealers or execute them offshore. In either case, I would expect our costs to go up significantly, and our clients’ returns to be harmed.
In conclusion, please help us continue to achieve the best possible trading results for our clients by rejecting the proposed order display requirements.