SEC Grants Extension of Intermarket Trading System De Minimis Exemption


Washington, D.C., March 3, 2004 - The Securities and Exchange Commission today granted an extension of the de minimis exemption from the provisions of the Intermarket Trading System Plan (ITS Plan) governing intermarket trade-throughs. The de minimis exemption was originally issued by the Commission on Aug. 28, 2002, and extended on May 30, 2003. The Commission's orders exempted from the trade-through provisions of the ITS Plan transactions in three specific exchange-traded funds (ETFs): the Nasdaq-100 Index ETF (QQQ), the Dow Jones Industrial Average ETF (DIA), and the Standard & Poor's 500 Index ETF (SPY). The exemption permits transactions in the three ETFs to be effected at prices no more than three cents worse than the national best bid and offer.

In the Commission's May 2003 order, the Commission extended the three cent de minimis exemption through March 4, 2004, in order to assess trading data associated with the de minimis exemption and to consider whether to adopt the de minimis exemption on a permanent basis, to adopt some other alternative solution, or to allow the exemption to expire. As a result of its review, the Commission has proposed, as part of its market structure initiatives, Regulation NMS under the Securities Exchange Act of 1934, as amended, which would include a new rule relating to trade-throughs.

Today's order extends this de minimis exemption for an additional nine-months through Dec. 4, 2004. Over the next several months, the Commission intends to consider proposed Regulation NMS, together with any comments received, and determine whether to adopt the proposed trade-through rule or an alternative approach. Depending on the action the Commission takes on proposed Regulation NMS prior to December 4, 2004, the Commission may determine to modify, withdraw, or extend the de minimis exemption.

Copies of the Commission's order can be obtained by contacting the SEC's Public Reference Room, 450 Fifth Street, NW, Washington, D.C. 20549-06009 or by accessing the Commission's Web site at


Last modified: 3/3/2004