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To: TFF who wrote (8521)	11/15/2000 12:22:25 PM
From: LPS5	Read Replies (2) \| Respond to of 12617

This is an excellent development. I am not, by and large, opposed to the practice of order routing or payment for it (how it is handled is another matter), but I believe that firms should be obligated to disclose the existence, and, if practiced, the performance, of such arrangements. SEC Approves Rule Making Brokerages Release Order-Routing Data Washington, Nov. 15 (Bloomberg) -- The Securities and Exchange Commission approved a rule requiring brokerages to release composite statistics on where they send customer trades and how well these orders are filled. The rule, approved 4-0, seeks to spur competition among firms, exchanges, and electronic trading networks by giving investors more information about how firms fill their orders. ``The rules should greatly increase the opportunity for public investors to evaluate what happens to their orders after they submit them to a broker-dealer for execution,'' the SEC said in a statement. Investors could use this information to decide whether they want to switch brokers, SEC officials said. The proposal seeks, in part, to address SEC Chairman Arthur Levitt's criticism of a common brokerage practice known as ``internalization,'' in which firms fill customer orders from their own inventories of stock. Levitt has said brokers who internalize have little incentive to try to improve on the best prices available to investors in the overall market. Levitt also has questioned whether brokers who engage in ``payment for order flow,'' in which a brokerage is paid for letting another firm fill its orders, are getting the best executions for their customers. Monthly Reports The rule, which is to be phased in starting next April, requires brokers to post quarterly reports on the Internet about the percentage of orders they route to various places for execution. These reports also would disclose whether the brokers internalize or sell orders to other firms. The standard also calls for firms to release monthly reports of their order-execution quality. The measures to be used, stock by stock, include trading spreads -- the difference between the buying and selling prices -- and speed of execution. The new rule includes a provision that would help shield firms from investor lawsuits that could be filed on the basis of the new data. The liability protection was sought by firms such as the Charles Schwab Corp., Morgan Stanley Dean Witter & Co., and Knight Trading Group Inc. Finally, the rule requires brokers to respond to customer requests for information about how their orders were filled during the previous six months. The rule, which has enjoyed broad brokerage support, was the least aggressive of six SEC draft proposals last year on various ways to help investors get the best executions for their trades. The most sweeping, which sought to create a central market for all customer orders, was opposed by the New York Stock Exchange and U.S. Senate Banking Committee Chairman Phil Gramm, a Texas Republican. © Copyright 2000, Bloomberg L.P. All Rights Reserved.

To: TFF who wrote (8521)	11/15/2000 10:38:18 PM
From: Cash	Respond to of 12617

While this could be good for traders/investors, it'll play havoc with your bandwidth. The typical minor increment now is .0625. With 1 cent increments, you increase the times that a bid/offer can change by 6. This means that for NASDAQ stocks, they'll have to send out 6 times as much data and traders on the receiving end will have to receive 6 times as much data. Many online quotation systems are choking now on the volume of data coming through. Just think how this will affect them. Even if the number of trades stay the same, the bid/ask jockying will require bandwidth needs on the order of 6 times what they are now. As a trader, you might find anything less than a T-1 puts you a a disadvantage. And you better have at least a dual CPU with at least 1ghz CPU's to process all the data. Based on past performance of quote providers, I doubt most will be able to handle the volume right off the bat. Many are trying to handle the volume problems they have today and probably haven't even had a chance to stop and think about what this will do to them.