The Securities and Exchange Commission is publishing a series of proposals setting out fundamental market structure reforms.
The five proposals, to be released for comment, are designed to enhance and modernize the national market system. The proposals include a new definitional rule that would designate reported securities as national market system securities and make certain other technical changes, and include all of the defined terms used in the national market system rules.
Other proposed new rules would:
- modernize the terms and standards of access to quotations and the execution of orders in equity securities in the national market system;
- require market centers to establish, maintain, and enforce policies and procedures designed to prevent the execution of trade-throughs in their markets;
- prohibit market participants from accepting, ranking, or displaying orders, quotes, or indications of interest in a pricing increment finer than a penny in any NMS Stock; and
- modify the requirements for consolidation and display of market data.
The Nasdaq Stock Market Inc. voiced its support for the market structure proposals. Although company senior officials are in the process of reviewing the newly proposed rules, Nasdaq says that it is encouraged by the reforms set forth by SEC chairman Bill Donaldson and the commission, which signal a historic development within U.S. market structure.
Commenting on SEC’s proposal, Bob Greifeld, Nasdaq president and CEO said, “Today’s market structure proposals represent a significant step forward for investors, and we commend Chairman Donaldson and the Commissioners for their leadership on this initiative.”