SEC OKs Nasdaq's SuperMontage
But debut may be delayed to test alternative system
By Leticia Williams, CBS.MarketWatch.com
Last Update: 2:46 PM ET Aug. 28, 2002
WASHINGTON (CBS.MW) -- The Securities and Exchange Commission on Wednesday approved the Sept. 6 kick-off of Nasdaq's SuperMontage stock trading system, but the system's would-be competitors can still block its debut.
Electronic communications networks or ECNs could push back the start date for SuperMontage if the SEC receives enough feedback from them saying they need more time to test an alternative system to Nasdaq's new trading platform.
The SEC has agreed to delay the debut of SuperMontage for 45 days, if ECNs sign a sworn statement indicating that they indeed plan to use an alternative display facility system, also developed by Nasdaq under a directive from SEC.
The reasoning behind the SEC's oath requirement is to ensure that competitors are not simply trying to delay further SuperMontage's launch.
However, there are concerns that signing an oath could take away competitor's choice to use the Nasdaq system or not, and could possibly prove problematic for them legally if they choose not to use it.
"Signing a formal oath and submitting it to the federal government is not something that should be taken lightly," said SEC chairman Harvey Pitt.
The language of the sworn oaths is subject to further review by the commission.
The commission voted 4-0 vote Wednesday giving the go-ahead for SuperMontage on the condition that it may be delayed until Oct. 11, if firms provide certification that they need additional time to implement Nasdaq's alternative display facility.
"This is a win for investors," said Nasdaq spokesman Scott Peterson said of the SEC's vote Wednesday.
"Supermontage will redefine the market to the benefit of companies, market participants and and investors," he said.
A group of ECNs have said they will use the alternative system but need additional time to switch over.
ECNs electronically match buy and sell orders.
SuperMontage -- a system that would compile and automatically match trades, creates a super-ECN on Nasdaq and effectively would regain some of business that companies like Instinet Group (INET: news, chart, profile) and Island ECN have grabbed from the trading system.
In June, Instinet announce that it would buy Island ECN in a $500 million all-stock deal. The two companies are the largest electronic trading networks and would provide hefty competition for SuperMontage. |
