By James Langton
(September 24 – 09:30 ET) Securities and Exchange Commission chairman Arthur Levitt is calling for greater competition and innovation in securities markets.
Levitt spoke last night at Columbia Law School on the fragmentation versus centralization of markets, and the effect of technology.
He called for the creation of a true national market system by linking markets, including ECNs. Levitt reiterated the SEC’s role in fostering competition, not dictating market structure. He called ECNs one of the most important market developments in decades, but noted that their fees aren’t fair, or subject to competition.
He lauds the increased competition in the options markets, but calls on it to establish the sort of market that governs equities – including increased quote visibility, best execution of customer orders, and more competition. He argued for open competition in NYSE-listed stocks, allowing broad over-the-counter trading of its listings.
While Levitt banged the drum for the free market, he cautions against absolutely unfettered competition. “Tonight, I call upon the leaders of the securities markets, particularly the public representatives on exchange boards to begin a public dialogue on whether
technology offers ways to garner the benefits of centrality without stifling
competition.”
“The guiding principles are clear: price discovery and best execution should be enhanced, liquidity should be fostered, interaction between institutional and retail trading should be maintained, market innovation should be encouraged, and competition among market centers, above all else, should remain vigorous and dynamic.”
-IE Staff
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