New Nasdaq Display System Will Address Pricing Issues NEW YORK -- The Nasdaq Stock Market provided new details on its plan for a new system for electronically displaying stock quotations and orders.
Nasdaq is seeking U.S. Securities and Exchange Commission approval for
the new system, responding to pressure from its dealers and others who
complain of difficulty in finding the best current price on the screen-based
stock market. The proposal, its designers say, will increase what is known
as "transparency" on Nasdaq. It marks a redesign of the computer screen
that Nasdaq market-makers and other traders look at for price and
order-size information.
But more significant, the new window also will attempt to address some of
the same concerns as those Nasdaq had in mind when it submitted last
year's ill-fated "central limit order book" proposal.
That plan sought to redress the splitting of Nasdaq trading volume among
market participants, and the subsequent investor confusion over where to
find the best price, by creating a vehicle that would display all investor and
dealer orders for Nasdaq stocks. It died after being filed with the SEC
when certain members of the National Association of Securities Dealers,
Nasdaq's parent, called it a threat to their livelihoods.
The new proposal, in contrast, comes of age when the splitting up of price
information among disparate trading systems -- known as fragmentation --
itself is seen as a big threat to traditional Nasdaq participants; for that
reason, proponents feel it stands a better chance of success.
"There's a growing realization that liquidity is fragmented and no one's sure
at any given time that they're getting the best price," said Holly Stark,
senior vice president at Dalton Greiner Hartman Maher & Co. and a
member of Nasdaq's Quality of Markets committee. "More people realize
that the only way out of the morass is to have some central place in the
market."
Among its features, the new window will allow Nasdaq participants to
display additional orders beyond their quotations to the market
anonymously. It also will show not just the very best bid and offer for a
particular stock but also the second and third best, along with the number
of shares behind each quote.
Frank Zarb and Richard Ketchum, chairman and president, respectively,
of NASD, also stressed that the proposed screen, which they hope to
implement next summer, won't be a "full book." Instead, participation will
be voluntary, and the set-up will leave market makers in charge of the
market's opening and will allow internal order matching at the best price
both by market makers and alternative trading systems known as
electronic communications networks, or ECNs.
However, they also both noted that times have changed since their last
effort at bringing some measure of centrality to Nasdaq. Citing SEC
Chairman Arthur Levitt's speech late last month urging the country's major
markets to centralize trading, they suggested their proposal will do just
that.
"There's now a substantial level of support from the market-making
community and the small-broker community that wasn't there before," Mr.
Zarb said.
Tuesday's Market Activity
Small-capitalization stocks fell after the Federal Reserve adopted a "bias"
toward higher rates, but the overall Nasdaq market managed to end the
day in positive territory.
The Russell 2000 index of small-capitalization stocks fell 0.60 point, or
0.14%, to 426.01, and the Nasdaq Composite Index, at 2799.67, rose
3.70, or 0.13%. The Russell 2000 had been up as much as 1.55 points
earlier in the day, and the Nasdaq composite had posted an intraday gain
of 38.
On its first day of trading, Altigen
Communications, whose 3.25 million
shares priced late Monday at $10
each, opened at 14 3/4 and traded
as high as 19 7/8 before closing at
16 5/8. The company designs,
makes and markets server-based
telecommunications systems that
allow customers to use the Internet
and telephone networks
interchangeably.
Concur Technologies lost more than half its market value, falling 20 1/16,
or 61%, to a 52-week low of 12 13/16. The Redmond, Wash., software
company said its fourth-quarter revenue will fall about 29% below analysts'
projections, primarily because of an unexpected delay in closing
quarter-end business.
ShowCase, a Rochester, Minn., computer-systems concern, also lost
more than half its market value, falling 5 1/2, or 58%, to a 52-week low of
4. Showcase said it expects to report a fiscal second-quarter loss of 16
cents to 18 cents a share, compared with analysts' projections of a
two-cent-a-share profit.
Interspeed tumbled 7 1/2, or 39%, to a 52-week low of 12. The North
Andover, Mass., developer of high-speed data-communication products,
which went public last month, said the booking of revenue on certain
transactions it expected to close in the quarter was delayed.
Eclipse Surgical Technologies slumped 4 3/4, or 32%, to 10 1/8 after it
said its third-quarter loss will be more than twice as wide as analysts had
been predicting. The Sunnyvale, Calif., medical-device company said the
capital equipment purchase cycle for its TMR 2000 laser systems, a
"significant" source of revenue, took longer than anticipated during the
period.
K-Swiss plummeted 7 13/16, or 29%, to 18 3/4 . The Chatsworth, Calif.,
athletic footwear designer said its third-quarter earnings will exceed
analysts' projections, but added that it didn't receive the futures orders it
had expected for first quarter 2000.
Efax.com leapt 2 1/8, or 23%, to 11 1/2, following Monday's 18% gain.
The Menlo Park, Calif., developer of electronic office devices that
combine printing, faxing, copying and scanning services in one product
agreed to provide voice and fax services to users of Microsoft's WebTV
Networks.
Trigon Healthcare, which trades on the New York Stock Exchange,
jumped 3 3/4, or 16%, to 26 3/4 . The Richmond, Va., managed
health-care company said its Mid-South Insurance Co. unit plans to exit
the health insurance market, effective April 30, and that it will take a
related charge of $49 million and $52 million, or $1.17 to $1.24 a share.
Trigon said that excluding the charges, it expects third-quarter earnings to
be in line with analysts' estimates and fourth-quarter earnings to exceed
projections.
WorldGate Communications, a Bensalem, Pa., TV-based Internet
provider, rose 2 9/16, or 11%, to 25 5/16. General Instrument released its
SurfView set-top terminal and formed a marketing agreement with
WorldGate, whose Internet Over TV Application will be the native system
on SurfView. |
