Instinet CEO Again Criticizes Nasdaq's SuperMontage Plan
(See Article below)
The SI community needs to realize that we must speak out with our strong voice on NOT allowing this Super Montage to just pass through, letting the NASD just do as the please. The small investor/trader is facing extinction here, and many don't even underdtand this at all.
Instinet CEO Again Criticizes Nasdaq's SuperMontage Plan
By GASTON F. CERON
Of DOW JONES NEWSWIRES
(This story was originally published late Wednesday.)
NEW YORK -- Douglas Atkin, the securities industry executive who is the loudest critic of the
Nasdaq Stock Market's planned upgrade to its stock-trading system, repeated his arguments
against the system before a group of academics and industry executives Wednesday.
Atkin, president and chief executive of Instinet Corp., an electronic communications network run
by Reuters Group PLC (RTRSY), derided the planned system, known as SuperMontage, as "a
papered-over solution" to Nasdaq's problems that falls short of the "fundamental change" that it
needs. He spoke during and after a speech at a securities conference held at Pace University
here.
Nasdaq President Richard Ketchum also spoke at the Pace conference and defended
SuperMontage in a separate speech, saying that it will benefit investors by providing a more
detailed view of the stock market.
ECNs such as Instinet work by matching investors' orders to buy and sell stock. Their advocates
say ECNs are more advanced than the process now used to bring together most buyers and
sellers of stocks, which ECNs say depends heavily on human interaction and is rife with conflicts
of interest and inefficiencies. ECNs operate primarily in Nasdaq stocks.
SuperMontage is a major part of the changes that Nasdaq is undergoing, which include the stock
market's quest for registered stock-exchange status and its transformation into a
shareholder-owned, for-profit company.
Atkin, repeating arguments that have been previously made against SuperMontage, said that
Nasdaq has designed it with the intention of competing with ECNs and helping traditional market
makers grab back the market share that they have lost to these trading systems in recent years.
SuperMontage would hurt competition among trading venues, Atkin and others have argued.
Atkin also faulted SuperMontage for not adequately incorporating "price-time priority" into its
features. Having price-time priority would mean that orders to buy a stock at a given price would
be executed in the order received. Atkin said Nasdaq is "the only major market in the world that
still allows the fourth person in line in the market's order book to trade ahead of the person first in
line."
Nasdaq's Ketchum, meanwhile, said that SuperMontage will provide a view of the supply and
demand for a given stock at prices beyond just the best available, a point that Nasdaq has
stressed in its defense of SuperMontage.
He also noted that Nasdaq has already addressed one of the main concerns that ECNs had about
SuperMontage, which dealt with how their stock quotes would be displayed on the system. The
compromise Nasdaq agreed to - and which won it the support of one ECN, Bloomberg L.P.'s
Bloomberg Tradebook - will give market participants the choice of seeing the quotes with or
without certain access fees that ECNs levy.
Atkin encouraged securities firms to voice their thoughts on SuperMontage and to back
"fundamental change in fairness and competition." Instinet, he said, continues to talk with the SEC
about SuperMontage.
A spokesman for the SEC, which will ultimately decide SuperMontage's fate, declined to comment
on the agency's timetable for action on the plan.
-By Gaston F. Ceron, Dow Jones Newswires, 201-938-5234
gaston.ceron@dowjones.com |
