May 13, 2004
IF ANY MARKET HAS A DISPLAYED PRICE AND SIZE, ORDERS SHOULD BE EXECUTED AGAINST IT ON AN IMMEDIATE AUTOMATED BASIS.
In the electronic age we live in, there is no fathomable reason that posted electronic quotations and sizes should not be firm and immediately executable. If a non-automated markets quotes are difficult to access I would submit that they are in the wrong business.
The other problem with this, if the rule is enacted as proposed, is how a broker dealer is to achieve its best execution obligations. If my firm sends orders to a fast market, and that market trades through a slow market up to five cents away, am I still considered to have achieved best execution for my customer?
In August 2002, I wrote an editorial published in Traders Magazine,
that addressed the heart of this rule proposal. I applaud the Commission for attempting to update the rules but would caution them to do their best to retain the INTENT of the National Market System proposed in 1975. The Commission should exist to protect the investor not the coffers of antiquated manual markets.
As for the market data section of the rule, I will again point you to another editorial I wrote again published in Traders Magazine, June 2001,
that addressed this issue. Market centers that CHARGE money for what they call their data should be ashamed of themselves, especially at the rates they currently charge. How much could these places charge for data feeds if the investing public private investors and institutions collectively took a month off? Where does the data come from? Why is there a need for rules that force the companies broker/dealers that service the PROVIDERS of the data private investors and institutions to pay market centers for data that is created by their own customers? All would be better served with doing away with this process altogether. If exchanges and market centers are relying on these fees to survive we would all be better off without them.
I look forward to seeing how this rule proposal will shape the coming years of this great nations securities markets. I hold out hope for the Commission to uphold its mandate to protect investors and maintain the integrity of the securities markets in their final decision.
Joseph P. Kennebeck
Associate Director Head of Trading
Electronic Global Securities, Inc.
545 Fifth Avenue
New York, NY 10017