2nd UPDATE: US Exchanges Seek Delay In Key Rule Changes -Source
21 Giugno 2011 - 8:12PM
Dow Jones News
U.S. exchanges have asked U.S. regulators to delay
implementation of key changes to market access rules until Nov. 30,
citing cost concerns and questions over the role of broker-dealer
units run by the exchanges.
The exchanges cited "a number of interpretive issues" as they
requested more time to prepare for the so-called "naked access"
ban, which is set to take effect on July 14. The appeal was made in
a letter to the Securities and Exchange Commission dated June 20
that was reviewed by Dow Jones Newswires.
The SEC moved in November to bar brokers from granting traders
unfiltered access to an exchange or trading venue, a move aimed at
preventing trading errors from causing a severe market disruption.
Such unfiltered access exploded with the growth of high-frequency
trading firms, which often don't want to be bogged down by a
broker's controls. The industry has spent the last few months
scrambling to prepare for the upcoming rule changes.
The exchanges requested extra time to "complete the development
and implementation of the compliance controls ... that will be
appropriately tailored to routing broker-dealers." They also said
they "have concerns that the costs associated with the
implementation and maintenance of [the changes] may be materially
in excess of the costs" estimated by regulators.
Exchanges operate broker-dealer units to route orders
electronically across the U.S. stock market, keeping trading
compliant with SEC rules that require stock trades to be executed
at the best price available nationally. It's also a way of
broadening exchanges' services offerings for traders.
The letter was sent to regulators on Monday, according to a
person close to the matter, after a growing realization that the
rules raise complex issues about the role of exchange-run
broker-dealers and the sometimes sensitive trading information from
customers that comes into play.
It's not unusual for regulators to delay major market overhauls.
Last fall, the SEC delayed implementation of new short-selling
rules and is in the process of delaying the implementation of the
Dodd-Frank financial changes. Regulation NMS, a set of SEC rules
that focus on fair price execution, the displaying of quotes and
access to market data, also saw a delay.
The letter to the SEC was co-authored by officials at BATS
Global Markets Inc., Direct Edge, Nasdaq OMX Group Inc. (NDAQ) and
NYSE Euronext (NYX). BATS and Nasdaq officials were not immediately
available for comment. A NYSE Euronext spokesman declined to
comment, and declined to confirm that the company signed the
letter. A Direct Edge spokesman confirmed that the company signed
it, declining further comment.
"We're ready to go July 14, but we think a phased-in approach
makes sense here," said Tim Mahoney, chief executive at BIDS
Trading, which operates an alternative trading system. "This is not
unusual in rule writing, that when you get to final stages, more
questions come up. But you'd much rather have questions answered
and make sure that the main point of the rule is best served."
-By Brendan Conway and Jacob Bunge, Dow Jones Newswires;
212-416-2670; brendan.conway@dowjones.com
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