SEC May Be Undermining Enforcement on Island ECN Case
Sun, 27 Jan 2002, 2:50pm EST
New York, Jan. 27 (Bloomberg) -- The Securities and Exchange
Commission may be undermining enforcement of securities laws by
asking another regulator to drop planned charges against Island
ECN Inc., the second-biggest electronic stock-trading network, the
New York Times said in its ``Market Watch'' column.
The National Association of Securities Dealers, which
regulates all over-the-counter brokers and dealers, planned to
charge Island ECN for giving paying customers, not the overall
market, access to the best bid and offer prices for the Nasdaq 100
tracking stock. The SEC in a letter last week asked the NASD to
drop the plan, the Times said.
Neither the NASD nor the SEC would comment on the letter, the
Times said.
``Island's closed system is bad for investors'' because
customers who trade only on the company's system may get inferior
prices, and those who don't pay for access may miss out on better
quotes, columnist Gretchen Morgenson wrote. Island's trading
volume in the stock puts the company under an SEC rule requiring
it to provide all investors with access to the best prices.
Andrew Goldman, a spokesman for Island, said the company
wants to provide its customers' bids and offers on a national
market system. The current alternative, the Intermarket Trading
System, is too slow, he added. Hardwick Simmons, chief executive
of the Nasdaq Stock Market, may have encouraged the SEC's position
with a letter last month stating that Island shouldn't be required
to participate in the Intermarket system, the Time reported.
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