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Non-Tech : Ashton Technology (ASTN) -- Ignore unavailable to you. Want to Upgrade?

To: Nanchate who wrote (3041)	12/3/1999 9:24:00 AM
From: Nanchate	Read Replies (1) \| Respond to of 4443

More on Rule 390: December 2, 1999 NYSE Votes To Eliminate Rule 390 By Lynn Cowan NEW YORK -- The New York Stock Exchange's board of directors voted Thursday to eliminate Rule 390, opening up the trading of some of its largest stocks to competing venues. By striking down the rule, the Big Board will allow member dealers to trade stocks that were listed before 1979 in places other than its own floor. The stocks affected include heavyweights such as General Electric Co. (GE) and International Business Machines Corp. (IBM). Member firms like Goldman Sachs Group Inc. (GS) will now be able to match buyers and sellers of these stocks in their own trading rooms, or at electronic communications networks, known as ECNs. In September, NYSE Chairman Richard Grasso said the exchange had no intention of ditching the rule. The NYSE had argued in the past against its elimination, saying it prevented market fragmentation and ensured better prices for investors by keeping member firms from consolidating trades on their own floors. But the rule - which opponents have labeled anticompetitive - has come under increasing criticism from both member firms and the Securities and Exchange Commission. The elimination of Rule 390 foreshadows a complementary development at the SEC that could affect the Big Board. The SEC next week is expected to consider allowing members of the National Association of Securities Dealers complete access to the Intermarket Trading System. The ITS connects the NASD with the Big Board and regional exchanges, but bars NASD-member brokerages from trading Rule 390-stocks. The combination of eliminating Rule 390 and the SEC's approval of NASD-member use of ITS for those stocks is seen increasing the NYSE's competition for trading its listings. Thursday's move was hailed by market competitors. Timothy H. Hosking, general counsel for Investment Technology Group Inc. (ITG), which operates the POSIT trade-matching system, said the change will benefit all parties. "It will be good for investors, and it will be good for us. It will enable people to put orders in that now they can't put into POSIT," he said, adding that he couldn't predict how much the system's trade volume would increase as a result. "And it will be good for the NYSE and its constituency. It will put them in a more competitive environment, and they are certainly very able to compete in that environment." During a press conference after Thursday's board meeting, Chairman Grasso said that the board is recommending that its ITS system be extended to allow trading of all stocks by nonmembers. Grasso characterized the repeal of Rule 390 as a measure that would help make the NYSE more competitive but didn't elaborate on how that would occur. Instead, he referred repeatedly to the amount of criticism the big board has received for hanging onto the rule until this point. "Think of all the time I won't have to spend talking about Rule 390," he joked. "The debate is not a constructive one." In other NYSE board activity, Grasso said that a committee that has been formed to examine whether the big board should be de-mutualized is still in a fact-finding state. He said the members have been talking about NYSE structural options to broker-dealers, specialists and floor-brokers, and they still plan to talk to listed companies and institutional customers . -Lynn Cowan, Dow Jones Newswires; 201-938-5293 A spokesman for the NYSE said the removal of Rule 390 still needs to be approved by the Securities and Exchange Commission. The New York Stock Exchange's main rivals, the Nasdaq Stock Market and the trading systems known as electronic communications networks, or ECNs, welcomed the removal of Rule 390, but called for even more. Three of the better known ECNs - Instinet Corp., Island ECN Inc. and Archipelago Holdings LLC - said they were glad 390 is gone, but added that they wanted to be let into the Intermarket Trading System, which links the Big Board with the NASD and regional stock exchanges. "We're very happy to have this ... barrier down because it's something we've been arguing against all along," said Sydnie Kampschroeder, marketing director for Archipelago. And Chris Concannon, associate general counsel for Island, said removing Rule 390 "is a step forward, but a substantial step is still left." Both Kampschroeder and Concannon called for ECNs to be allowed to access ITS. "Instinet has long supported initiatives that make capital raising more efficient and which bring issuers and investors closer together," said Instinet Chief Executive Doug Atkin in a statement. "Eliminating Rule 390 is a key step towards that goal - but we need to go further so that investors can achieve the best price on any market as well as a cost-effective execution." Atkin said that for access to be meaningful, ITS needs to implement a price-time priority regime. "This will mean that the trading venue with the best price will execute on behalf of investors at that price - bringing the U.S. closer to the Congressional mandate for a national market system." Instinet is a unit of Reuters Group PLC (RTRSY). Through a spokesman, Frank Zarb, the chairman of Nasdaq's parent, the National Association of Securities Dealers, said: "Congratulations on the removal of this long-standing anticompetitive rule. It is my hope that removal of another anticompetitive NYSE rule, rule 500, won't be far behind. Investors and issuers will both benefit when these barriers to free and fair competitions are finally eliminated." Rule 500 deals with the ability of companies to leave the NYSE. A spokesman for the NYSE declined to comment.