SEC Extends Review Of NYSE Retail Trading Proposal By 60 Days
05 Maggio 2012 - 12:30AM
Dow Jones News
U.S. stock-market regulators will take another two months to
review a proposal by NYSE Euronext (NYX) that would allow the
exchange group a new way to compete for retail investors' trading
business.
The Securities and Exchange Commission on Friday extended by 60
days its review of the proposed NYSE program, which would see the
Big Board parent compete for individual investors' orders by using
some of the same methods as the banks and trading firms that
currently execute many of those trades.
An SEC spokesman confirmed the extension Friday.
NYSE Euronext originally submitted the program last fall,
seeking to separate out stock orders coming from retail brokerage
firms and make them eligible to receive improved prices on their
trades. The exchange operator proposed to allow market makers and
other traders to offer prices that improved upon the going market
rate by as little as a tenth of a cent.
The proposal drew protest from banks and trading firms, who
warned that allowing share prices to move to finer increments
risked destabilizing those prices, because liquidity would be
stretched out across a wider range of potential prices.
A handful of firms currently dominate the facilitation retail
investor orders, including Knight Capital Group (KCG), UBS AG (UBS)
and Citigroup Inc (C). Such firms pay fees to retail brokers in
return for the first chance to trade their customers' orders. The
firms also can choose to provide more competitive prices than may
be available on the public markets.
If orders are unfilled by such firms, they are often sent on to
rival trading houses or private stock markets known as dark pools
where they may be filled before winding up on an exchange.
Exchange operators have complained that the process has
minimized the presence of retail-level trading on their markets.
Individual investors' orders are prized by faster-moving firms that
can pocket profits by rapidly turning over the shares, while retail
traders typically hold their investments for a longer period of
time.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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