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To: aldrums who wrote (8579)	1/7/2001 11:58:23 PM
From: LPS5	Respond to of 12617

Hey Al, I'm not sure what this person was suggesting either. Perhaps I'm reading it wrong, but it seems that he has the difference between a quote-driven and an order-driven market confused. LPS5

To: aldrums who wrote (8579)	1/8/2001 4:21:15 PM
From: LPS5	Read Replies (1) \| Respond to of 12617

NYSE Tops Nasdaq on Investor Prices, Not Speed, SEC Study Says Washington, Jan. 8 (Bloomberg) -- Investors can expect to get better prices on the New York Stock Exchange than on the Nasdaq Stock Market for all but the largest stocks, a Securities and Exchange Commission study found. The SEC economic study also found, though, that individual investors often get faster execution of small orders on Nasdaq, the second largest U.S. stock market, than on its rival. The 23-page report said investors who trade 300 shares of most Nasdaq stocks can expect to pay as much as $16.50 more than they would when trading a comparable NYSE security. That's because trading spreads, the difference between the buying and selling price of a stock, are as much as 11 cents a share wider on Nasdaq for small orders, the study said. A wider spread means worse prices for investors and typically higher profits for the brokerages arranging the trade. ``For Nasdaq, it confirms a challenge it faces, and quantifies what most traders freely acknowledge -- the ability to trade inside the best displayed quotes is substantially limited,'' SEC Chairman Arthur Levitt said. Levitt, who plans to retire in the next few weeks, also chided the NYSE over the study's findings on trade-execution time. ``For the NYSE, it sheds further light on the time it takes for incoming orders to interact with trading interest on the floor -- time its customers have long pressed this market to reduce,'' the SEC chairman said. The staff study, which compared 221 stocks in each market during the week of June 5, 2000, offered no policy recommendations. The study found that on Nasdaq, executions of small customer orders are as much as 18.7 seconds faster than on the NYSE. That's more than three-and-a-half times the speed of order execution on the Big Board, it said. The NYSE, the world's largest exchange, is an auction market where specialists on the floor handle the vast majority of orders for Big Board stocks. Nasdaq is an electronic, dealer-based market in which many orders are matched internally from the dealer's own inventory. ``The study should increase pressure on Nasdaq to make its market more efficient,'' said Vanderbilt University finance professor Hans Stoll, who reviewed the report. ``Are these numbers really big? I don't think so. But for the small investor, the difference in prices might well lead him to conclude that the NYSE would be a better market for him, despite the higher speed on Nasdaq.'' The SEC study found no meaningful difference in trading spreads for the largest Nasdaq and NYSE stocks. Among the biggest Nasdaq stocks are Microsoft Corp., Intel Corp. and Cisco Systems Inc. The largest NYSE stocks include General Electric Co., IBM Corp., and Exxon Mobil Corp. The study found Nasdaq spreads are more than double the size of those on the NYSE for small orders of stocks with between $200 million and $1 billion in market value. Without analyzing the reasons for the difference in prices between the two leading U.S. markets, the report said customers have less opportunity on Nasdaq to place orders that improve on the best available price. The study also noted that Nasdaq is more fragmented, so that ``most of the trading is done with dealers with relatively little interaction between customer orders.'' Nasdaq officials said the study should also have considered other factors -- such as volume and price visibility -- that bear on the quality of a market. ``We object to a government study that seems to bless one market over another by taking a narrow, tunnel-vision approach,'' said Nasdaq executive vice president John Hilley. Nasdaq President Rick Ketchum expressed concern that the study could harm the market's business ``if investors and companies see our market differently as a result of a misleading snapshot.'' NYSE research vice president George Sofianos said the exchange was aware that small orders were executed more quickly on Nasdaq. ``We tell investors, if you want speedier execution, we can give it to you,'' Sofianos said. ``But if you are willing to wait a few more seconds, you can get price improvement.'' The SEC initiated the study of the two largest U.S. stock markets in 1999, as it was considering whether to centralize information and trading among U.S. exchanges. This review led the SEC to adopt a rule last November requiring brokerages to release composite statistics on where they send customer trades and how well these orders are filled. © Copyright 2000, Bloomberg L.P. All Rights Reserved.