Judith, I'm with you. I would certainly like to know the reason for the hype. What follows is the only news I can find for NITE that might have a bearing on tomorrows prices. NITE was on the winning side of this dispute but I don't know how or if that translates in to higher prices tomorrow. Jeff
<<
Nasdaq Panel Rejects Proposal to Halt Trades of Volatile Stocks
Washington, Feb. 3 (Bloomberg) -- A Nasdaq Stock Market panel rejected a proposal to temporarily halt trading of volatile stocks, as some broker-dealers voiced concern about how the halts would be triggered and whether they would worsen price swings.
While supporters said trading halts would let investors adjust to rapidly changing share prices, they were outvoted on the panel by industry executives who feared a halt would worsen volatility.
''A halt could accelerate volatility as traders try to get their orders in before the wire,'' said Jeff Citron, chief executive of Datek Online Holdings Corp., an electronic brokerage. A member of the volatility panel, he voted against the proposal, calling a trading halt ''a very dangerous mechanism.''
The proposal was rejected Monday by the panel, which was convened two months ago to examine ways to respond to wide price swings on some Internet company stocks. The concept of a trading halt was the only plan it considered.
The panel, which reports to Nasdaq's quality of markets committee, was split between representatives of wholesale dealers who backed a trading halt, and those from retail brokerages, institutional firms and investment advisers who opposed it. The panel vote was reported today by the Wall Street Journal and the New York Times.
The quality of markets committee, which is due to meet Feb. 18, ''is likely to examine the proposal of trading halts,'' Nasdaq spokesman Scott Peterson said. The committee can accept the volatility panel's recommendation, ask it to reconsider the plan, or ask it to consider another proposal, said Holly Stark, a trader on the committee.
The proposal isn't likely to be resuscitated, a trading-halt supporter on the volatility panel said.
'A Dead Issue'
''This is now a dead issue,'' said Bernard Madoff, a New York broker-dealer who unsuccessfully pushed for the proposal. ''My guess is that there are going to be a wave of people saying, 'Why isn't Nasdaq doing something about this?' ''
Stark, head trader for Dalton, Greiner, Hartman, Maher & Co. in New York, agreed, saying she'd be ''surprised'' if the quality of markets committee asks the volatility panel to reconsider the proposal.
Nasdaq convened the volatility panel amid concern about price swings in some Internet company stocks, many of which are traded online by individual investors.
For example, shares of Broadcast.com Inc., which airs radio and TV broadcasts and corporate conference calls on the Internet, more than doubled to 285 1/16 in two trading days last month, before tumbling to 108 1/2 a week later. Theglobe.com, which lets people set up free Web pages, soared from an initial offering price of 9 on Nov. 13 to as high as 97, before falling to 63 1/2 the same day.
Madoff and other wholesalers argued that a halt would give traders and investors ''a chance to sort things out.''
''The public would have a chance to cancel orders that aren't executed, and provide an opportunity for buyers and sellers to appear,'' he said.
'More Confusion'
Citron countered that any formula for triggering a halt would fail because some stocks with price fluctuations have no order imbalances, while others with narrow swings have such imbalances.
''You may end up halting 10 or 15 stocks a day, and reopening them could cause more confusion because you'd have to deal with the queues of orders that have built up,'' he said.
At Monday's meeting, the proposal was supported by Madoff and representatives from Charles Schwab Corp.'s Mayer & Schweitzer Inc., Citigroup Inc.'s Salomon Smith Barney Inc. and Herzog Heine Geduld Inc., Nasdaq officials said. Among the opponents were representatives of Datek, Merrill Lynch & Co., Goldman, Sachs & Co., Morgan Stanley Dean Witter & Co., American Century Investment Management, and Knight/Trimark Group Inc.
Divisions on the issue reflect differing business interests among firms represented on the panel.
Different Interests
In a rapidly falling market, dealers are obligated to risk their money to buy stocks because the sellers outnumber the potential purchasers.
On the other side, investors such as pension and mutual funds typically want markets to stay open so they have the option to sell during steep declines. Retail firms benefit from open markets because of the trading commissions generated.
Nasdaq's quality of markets committee, headed by Thomas Joyce, Merrill Lynch's U.S. equities chief, includes at least several investment advisers who typically oppose trading halts. Among the members of the committee are executives with American Century, T. Rowe Price Associates Inc., and Fidelity Investments.
Concerns about volatility of some stocks has prompted other actions.
The Securities and Exchange Commission approved a rule last month that would give broker-dealers as long as 30 minutes to set quotes on IPOs before Nasdaq trading begins. The rule seeks to quell the volatility of some IPOs by making the prices better reflect market supply and demand.
Some brokers also have taken steps by removing some stocks from automatic execution systems or raising margin requirements for some stocks.
15:59:20 02/03/1999
>> |
