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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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