Morgan Keegan & Co. Inc.
August 15, 2002
The Honorable Harvey Pitt
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549-0609
Re: SuperMontage Launch
Dear Chairman Pitt:
Morgan Keegan & Co. Inc. would like to take this opportunity to express its support for the expeditious approval of the NASD's Alternative Display Facility (ADF) and implementation of Nasdaq's SuperMontage system. All conditions found in the 2001 Commission approval order for SuperMontage (the "SuperMontage Approval Order") have been fully met, and we strongly believe that it is time to enhance the quality of the Nasdaq market by commencing operation of SuperMontage.
Morgan Keegan is one of the South's largest investment firms and a subsidiary of Regions Financial Corporation, one of the nation's 25 largest bank holding companies. As a large regional brokerage firm dealing with both institutional and retail customers, we believe that implementation of the SuperMontage system will benefit all of our customers by providing a more liquid, transparent and accessible market.
The Commission conditioned the SuperMontage Approval Order on several requirements, which we believe have been fulfilled. First, the NASD's ADF allows any NASD member registered as either a market maker or as an ECN to publish quotations that would allow satisfaction of the Order Handling Rules and Regulation ATS. Second, the ADF collects and consolidates quotes from market makers or ECNs and sends all quotes to the exclusive SIP. NASD has successfully tested this capability with the SIP multiple times. Lastly, participation in SuperMontage is entirely voluntary. The quotation dissemination system for the NASD's ADF is entirely separate from the Nasdaq SuperMontage execution system. Firms also have the regional exchanges available as venues for trading Nasdaq securities without participating in SuperMontage.
Implementation of SuperMontage should not be delayed due to the self-serving interests of a few market participants who are attempting to delay the launch of SuperMontage by arguing that the ADF is not viable. The NASD built the ADF with the functionality required by the Commission and made it available for testing, yet no market participant chose to participate. In contrast, a large number of market makers, ECNs and UTP exchanges have spent time and resources testing SuperMontage and are anxious to have the system in production.
In conclusion, we strongly believe that approval of the ADF and subsequent implementation of SuperMontage will be of great benefit to the investing public and respectfully request that the Commission proceed with these initiatives.
Hedi H. Reynolds
Managing Director, Nasdaq Trading
cc: The Honorable Isaac Hunt, Commissioner
The Honorable Cynthia Glassman, Commissioner
Annette Nazareth, Director, Division of Market Regulation
Robert Colby, Deputy Director, Division of Market Regulation
Hardwick Simmons, Chairman and CEO, The Nasdaq Stock Market, Inc.
Richard G. Ketchum, President, The Nasdaq Stock Market, Inc.