Subject: File No. S7-19-03
From: Louis J Matrone

October 14, 2004

From: Louis Matrone []
Sent: Thursday, October 14, 2004 2:50 PM
To: Chair William H. Donaldson
Subject: Reg NMS

Louis Matrone
6652 Ryeworth drive
Frisco, Texas 75035

October 14, 2004

Chair William H. Donaldson
450 5th St NW
Washington, DC 20549

Dear Chair Donaldson:

Dear Sir,

The SEC is currently considering changes to rules governing the congressionally mandated National Market System. The SEC's proposed Regulation NMS would address several issues, including:

  • the imposition of a uniform rule for the prevention of trade-through across all market centers;
  • a uniform rule that would permit all market participants to access other markets on a non-discriminatory basis with a de minimis charge for such access;
  • a ban on sub-penny quotations; and * modification of the formula used for allocating market data revenues.

Together, these changes represent the most significant regulatory reform for U.S. equity markets in over 30 years.

In its comment letter on the proposal to the SEC, the Security Traders Association (STA) recommended four steps be taken as a first phase towards movement to the NMS envisioned by Congress. The four steps are:

  • connectivity between market centers;
  • access to tradable quotes on a non-fee basis (e.g. no access fees);
  • automatic execution of quotes; and
  • immediate refreshment of quotes.

Following the implementation of these four steps, real time experience will allow the Commission to empirically assess whether a modification of the current trade through regime is necessary, or if the trade through problem is moot. In its comment letter, the STA also reiterated its positions on the need for elimination of access fees and the banning of sub-penny quotes.

Finally, on market data fees, the STA supports the elimination of practices designed solely for commercial gain and supports appropriate reward for quality quotes and practices that improve market liquidity.

As your constituent and as a member of the STA, I would like to know your views on these issues. As you are aware, efficient and robust capital markets benefit the US economy, create more jobs, and ultimately benefit all investors.

You are to be comended on your work on this .

You also posess great insight to the right way things need to get done


Louis J Matrone