Subject: FILE S7-8-99

Date:    02/07/2000 3:41 PM
     
     
     
     
To the SEC:
     
     
The United States has the lowest access prices for market data in the world. 
I don't mean just the exchange fee but the total consumption cost of the 
information.  You can get free access from your e broker.
     
The SEC is encouraging the Exchanges to be competitive through its creation 
of rules that permit the existence of ECNs.  Because ECNs cannot generate 
money from information they compete on the basis of low execution cost.  It 
is very likely that execution cost will go to zero within the next 3 years.
     
However, execution cost will only go to zero if an Exchange can generate money 
from information.   No information revenue. No free execution.   As a market 
participant I much prefer paying for information and having zero execution 
because zero execution helps liquidity.  Everyone who needs market data in the 
U.S. already has it.  Lowering the fees by government mandate will only create 
a small benefit for e-brokers but none for individuals and will weaken 
exchanges.
     
Information is the largest source of free cash flow for virtually every 
exchange in the world.  This is especially true for any exchange that does 
not control clearing.  None of the American exchanges control clearing.  If 
the SEC adopts its proposed regulations none of the American exchanges will 
be demutualized and in fact they will be driven from the market by their 
German and English counterparts.
     
The SEC is moving in the wrong direction and should be deregulating, not 
re-regulating.  Why do you guys think most utility regulators have abandoned 
cost recovery as a method?  It does not work and stifles innovation.
     
There is an old saying - "every government regulation is a profit 
opportunity for someone".  Your backwards looking understanding of the 
markets will result in destruction of the institutions you are trying to 
regulate and a fantastic opportunity for the European and Asian exchanges.
     
     
Regards,
     
Greg Smith