--Exchanges, banks set to discuss framework of U.S. markets at
House hearing
--Nasdaq CEO discussed attending, will not appear, sources
say
--Hearing to examine climate for issuers and investors, Facebook
IPO likely to come up
(Updates with additional background on hearing, attendees.)
By Jacob Bunge and Jessica Holzer
Top executives of NYSE Euronext (NYX) and Knight Capital Group
(KCG) are expected to testify next week at a U.S. House of
Representatives hearing examining the functions of U.S. financial
markets, according to persons familiar with the matter.
Robert Greifeld, the chief executive of Nasdaq OMX Group Inc.
(NDAQ), was also in discussions to attend the hearing but has opted
not to appear, according to people familiar with the situation.
As a result, lawmakers are likely to hear from two of the most
outspoken critics of Nasdaq OMX's handling of Facebook Inc.'s (FB)
public-market debut last month, marred by technology problems that
brokers and traders now blame for an estimated hundreds of millions
in losses.
The June 20 hearing, focusing on the climate for stock-issuing
companies and investors, will be held by members of the House of
Representatives's Committee on Financial Services. The gathering
has been put together by Rep. Scott Garrett (R., N.J.) and David
Schweikert (R., Ariz.), respectively chairman and vice chairman of
the House Subcommittee on Capital Markets and Government Sponsored
Enterprises.
A spokesman for Nasdaq OMX confirmed that Mr. Greifeld would not
attend the hearing. No regulators are expected to attend, according
to a congressional aide. The schedule and attendees for the hearing
could yet change.
The plan for the hearing arose after financial markets' role in
capital-raising and job creation came into focus during discussions
over the JOBS Act, passed in March and aimed to ease
corporate-governance and financial-reporting requirements for
companies looking to tap public markets.
However, the star-crossed initial public offering of Facebook is
almost certain to come up during next week's hearing. Knight, based
in Jersey City, N.J., is among the market-making firms that took
the heaviest financial hits when system problems at Nasdaq OMX left
some trades unconfirmed for hours. Knight is a major facilitator of
retail investor trading, and its CEO Tom Joyce has criticized
Nasdaq OMX for mishandling the hugely anticipated IPO.
NYSE Euronext CEO Duncan Niederauer, also slated to attend, last
week contested Nasdaq OMX's plan to compensate some trading losses,
which involves discounting trading fees alongside a cash payout.
The Big Board has warned that lowering transaction costs could see
Nasdaq OMX pull market share from other exchanges.
William O'Brien, chief executive of stock-exchange operator
Direct Edge Holdings LLC, is scheduled to testify at the hearing,
according to persons familiar with the matter. O'Brien last week
said Nasdaq OMX's idea to discount trading fees seemed
"illegal."
Dan Mathisson, head of U.S. cash execution and trading for
Credit Suisse Group AG (CS), is also expected to testify next week,
alongside Jeffrey Solomon, chief executive of Cowen and Co. and
Kevin Cronin, global head of equity trading for asset management
firm Invesco Ltd. (IVZ).
Other expected attendees include Jim Toes, CEO of the Security
Traders Association, and David Weild, capital markets adviser at
Grant Thornton LLP and author of a study examining the decline in
the number of public companies in the U.S.
-Write to Jacob Bunge at jacob.bunge@dowjones.com and Jessica
Holzer at jessica.holzer@dowjones.com