Date:    05/03/2000  4:07 PM

Professional Expert Trading Systems, Inc. 
210 Route 4 East, Suite 206
Paramus, NJ  07652
     
     
     
Mr. Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission 
450 Fifth Street, NW
Washington, DC  20549
     
Dear Mr. Katz,
     
Thank you for the opportunity to comment on the matters contained in the 
Commission's Concept Release on the Regulation of Market Information Fees 
and Revenues.  These issues have been of great business importance to me 
over many years; during which time I have presented my views and 
recommendations both in writings and in personal appearances before the 
Commission and members of its staff.  As the co-founder and Former Chairman 
and President of Instinet - a "radical" investment industry concept when it 
began operations in December 1969 - I have advocated on several of those 
occasions an equally radical approach to market information fees.  There 
shouldn't be any.
     
The passage of time has confirmed and strengthened that opinion.  The 
significant revenues Self Regulatory Organizations (SROs) currently receive 
from their market fees and charges notwithstanding, the data stream and the 
data should be supplied free to vendors and, through them, to all end users 
free of any SROs charges.
     
Is this really such a radical idea?  When we examine the broadest business 
landscape of information providers and information receivers - advertising 
- it's apparent that free is the norm; and the security industry's current 
model is an anomaly.  Advertisers don't charge their media conduits to 
carry their promotional and informational messages.  Advertisers also pay 
their agencies and consultants to prepare and format these messages into 
the most effective form before delivering it to their distributors - 
newspapers and magazines and TV.  Those vendors who may or may not charge 
their customers to receive this information.  But I know of no advertiser 
who extends his hand into the pockets of his end users, extracting a fee.
     
Why is there a different pricing model for the securities industry and the 
SROs?  Like other businesses and organizations it's engaged in advertising 
- its markets and their activity and price changes.  But unlike other 
advertisers it is under a regulatory mandate to provide this 
disclosure.  Nobody compels Intel to advertise each of its chip designs or 
products; but the securities laws require that every trade in INTC be 
reported in all its details as quickly as possible.
     
While economists have frequently debated whether a strongly branded product 
needs to continue a comprehensive advertising campaign, does anyone believe 
INTC would continue to be a major investment holding if the advertising of 
its trades and trading activity were to stop?  Would the NASD and its INTC 
market-making members tolerate that?
     
I respectfully submit this reasoning is logical not simplistic.  The SROs 
have long recognized this same logic in providing time delayed market 
information free to end users.  In a world of broad band, DSL and the 
Internet coupled with the intense volatility of today's equity markets how 
can we justify pushing end users further away from real-time, full-time 
disclosure unless they pay a fee to an advertiser who must advertise to 
them for commercial and regulatory reasons?.
     
In overseeing the regulation of market information fees and revenues, I 
also strongly urge the commission to require the SROs to provide their data 
streams without fee to vendors of market information.  Here, again, I ask 
the commission and its staff to look at advertisers and the media for an 
analogy.  After an advertiser has chosen his message for presentation to 
the vendors who will distribute it to end users, he provides it to the 
media in the format they require.  The media distribute it without making 
any payment to the advertiser or his representative who have consolidated 
the material into the format the media requires.  Why should the paradigm 
be any different for an advertiser who needs to advertise and is under 
regulatory requirements to do so?
     
Hopefully, my proposals will not reignite the debate over who "owns" market 
data.  As the commission stated in its own release, referring to the 
Securities Exchange Act of 1934, as amended in 1975, any ownership rights 
in market data is subordinated to the commission authority in establishing 
a national market system.
     
In its oversight of this area, I urge the commission to break up the 
monopolistic agreement that currently exists between the NASD and MCI 
Worldcom with respect to the transmission and distribution of market 
information.  Here, as in all areas, the commission should allow 
competitive forces to operate.  The NASDAQ - MCI Worldcom arrangement is 
the antitheses of that economic goal.  Vendors of NASDAQ market information 
are compelled (as they have been for years under the NASDAQ - MCI 
agreement) to receive their datafeed only from MCI Worldcom, and only under 
a long-term contract at MCI's fees, and only using technology and equipment 
that MCI specifies.  Certainly, MCI's distribution system and network have 
been robust and reliable; but this arrangement has created a monopolist 
wielding broad ranging powers that I believe have never been contemplated 
by the commission.  (In a side letter to the Division of Market Regulation 
I ask them to contact me regarding my company's disputes with MCI, the 
circumstances of which enable MCI to be an arbiter of who receives NASDAQ 
market information.)
     
Vendors of market information should be able to choose the manner and mode 
in which they receive the datastream of market information.  They should be 
able to elect to receive it directly from SRO like from SIAC - as many now 
do - over a high speed communications linkage provided by their 
communications carrier of choice.  Alternatively, entrepreneurial firms 
might arise who will provide either enhanced communications technology or 
more attractive data characteristics.  These entrepreneurs should be 
entitled to charge for their services in a fully competitive environment.
     
I believe it is realistic to expect these competitive sources to 
arise.  How many people - in the 1950's -  thought a Chicago - St. Louis 
based upstart, like MCI, could ever challenge the great communications 
consolidator, AT&T?  Closer to my own experience, who would have ever 
thought, prior to the Internet, that Instinet's growing hegemony in 
computerized transactions would be challenged by a proliferation of ECN's?
     
My conclusions are, I believe, implicit in what I've already 
suggested.  The commission should strive to avoid the quicksands of rate 
regulation and rate setting and continue its salutary record of encouraging 
competition in all areas of our securities markets.  Real-time, fully 
disclosed market information should be available free of any SRO imposed 
fees to end users and vendors of market information alike.  The NASDAQ - 
MCI Worldcom monopoly should be broken up forthwith and no new ones 
permitted as technology and innovation continue to stimulate, enrich and 
change the securities industry..
     
I appreciate the opportunity to present my comments to the commission and 
to its staff.
     
Very truly yours,
     
     
     
Jerome M. Pustilnik
President
     
cc:     The Honorable Arthur Levitt, Chairman
                 The Honorable Norman S. Johnson, Commissioner
         The Honorable Isaac C. Hunt, Jr., Commissioner 
         The Honorable Paul R. Carey, Commissioner
         The Honorable Laura Simone Unger, Commissioner
         Annette L. Nazareth, Director, Division of Market Regulation 
         Robert L.D. Colby, Deputy Director, Division of Market Regulation,
                 and Senior Advisor to the Chairman
         Belinda Blain, Associate Director, Division of Market Regulation 
         Elizabeth K. King, Associate Director, Division of Market Regulation 
         Daniel M. Gray, Division of Market Regulation