July 21, 2006
We are writing to lend our support to those that have already posted comments to the proposed rule change (File#SR-NYSE-2006-46), specifically Prime Executions, SunGard Global Executions, Bay Crest Partners, and LEK
Securities.
In short, we believe a proper review time should be set aside so the SEC can substantiate the claims made by the NYSE and undertake their own independent review of the possible effects and fallout from the new fee structure. In so doing, we welcome the SEC to come to the floor and speak with us.
The SEC has been properly cautious in the past and we are certain the Commission will do the same in respect to this proposed rule change. For the record, we would like to point out some issues of concern in the NYSE's filing.
In it's filing, the NYSE accepts that commission rates are going down. What it neglects to mention is the percentage of revenues that the ten largest firms would pay (estimates are less than 1%) versus what most others will
pay (some as much as 5%) give a significant unfair advantage to the largest firms. This fact is not transparent in the filing. Also, this example of a
regressive form of fee structure is an inefficient method to achieve one of the stated goals of the proposal to "enable it (NYSE) to grow its trading
revenue over time."
Clearly this new fee structure fails to "distribute costs more equitably across" the NYSE's customer base. But more troubling is the need for speed, the vague language, and the lack of evidence of in depth analysis of the
possible consequences. With the NYSE a monopoly, or at least with monopolistic features, close consideration is warranted.
As always, we have utmost confidence in the SEC to explore the simple questions, "Is this in the best interest of our secondary markets?" and "Is this issue necessary to pass through so quickly?"
We thank you for your time and look forward to perhaps meeting with you on
the floor sometime.
Sincerely
Frank J Cannarozzo