SEC approves Nasdaq's SuperMontage trading system
Wednesday August 28, 1:36 pm ET
Reuters Market News
biz.yahoo.com
By John Poirier and Nicole Maestri
WASHINGTON/NEW YORK Aug 28 (Reuters) - The Nasdaq Stock Market on Wednesday got final regulatory approval for its long-awaited $100 million trading system, SuperMontage, that the No. 2 stock market developed to wrest back market share from competitors.
But the system may not begin trading real securities until October if alternative trading networks, like Instinet Group Inc. (NasdaqNM:INET - News) and Island ECN that lobbied against SuperMontage, tell the U.S. Securities and Exchange Commission that they need more time to access an alternative trading platform.
"My predisposition is to have as much competition in the marketplace as we possibly can, provided that it's fair competition," said SEC Chairman Harvey Pitt at the commission's open meeting to discuss the decision.
Electronic communication networks, which match buyers and sellers of stock electronically, fought for the development of an alternative display facility -- an alternative to SuperMontage. New York-based Instinet is majority owned by global news and information company Reuters Group Plc (London:RTR.L - News; NasdaqNM:RTRSY - News).
The ECNs feared the new trading facility would become a monopoly, since it would post quotes and orders from all market participants, including ECNs.
ECNs now have five business days to tell the commission if they want more time to set up their connections to an alternative trading system, meaning the SEC could delay the launch of SuperMontage until Oct. 11. If no ECNs say they need more time, SuperMontage could start trading real stocks as early as Sept. 6.
"I assume that somebody will say" they need more time, said Charlotte Chamberlain, an analyst with Jefferies & Co. "I just don't know who."
When the SEC approved SuperMontage, an order display and execution trading platform, in January 2001, it made its start contingent on the launch of the NASD's alternative display. The NASD is the parent company of Nasdaq, but Nasdaq is currently in the process of being spun-off.
"This is a win for investors," said Nasdaq spokesman Scott Peterson of the SEC's decision. "SuperMontage will redefine the market as we know it to the benefit of companies, market participants and investors."
The commissioners backed the trading facility in 4-0 vote, but debated what they called "onerous" certifications imposed on market participants who say they need more time.
The SEC said it will revise the language of the proposed certifications to reflect "good faith" intentions that they need more time to iron out technical problems. |
