The proposed solutions to the fragmentation "problem" lie between an ITS styled, technologically updated intermarket/ECN/ATS link (i.e., a system that sends an order to the lowest bid/highest offer, while not showing the quotes in order book form) vs. a central limit order books that looks and 'acts' like an ECN.
I personally am in favor of the following: A moratorium on new ECN and ATS creation for a year or two, letting consolidation take its course (mergers, acquisitions, and insolvencies of the existing exchanges, ECN's, and ATS'), and culminating in a re-examination of the market landscape at the end of that period.
If, at that time, the market was deemed (still) fragmented to an extent that customers were overwhelmingly not getting access to the best prices available, one of the proposed systems would be put in place. Whether the upgraded Intermarket Trading System or the Central Limit Order Book, I would want it run by a private corporation formed under government charter, specially for that function, reporting directly to the SEC - not unlike the manner in which SIPC or the NSCC do.
I would also favor, during the "new trading system moratorium," both the implementation of decimalization and the mandated combination of the NYSE and NASD Regulatory bodies, for the purposes of consistency and efficiency. The combined regulatory body formed by merging the two SRO's and their membership would have regulatory power over the broker-dealers using whichever new system, if any, that winds up being adopted.
Meanwhile - as previously mentioned - the CLOB or ITS would be SEC-monitored and reporting.
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