SEC Delays Decision on NYSE Proposal to Attract Retail Orders
February 08, 2012, 4:31 PM ESTBy Nina Mehta
Feb. 8 (Bloomberg) -- The U.S. Securities and Exchange Commission extended its review today of the New York Stock Exchange’s proposal to draw more orders from retail brokers.
NYSE and NYSE Amex sought permission in October for a one- year pilot program to attract orders from individual investors by offering them potentially better prices than are publicly available. Postponing a decision isn’t an indication of whether the SEC is likely to approve or reject the rules proposed by the two NYSE Euronext stock exchanges.
The SEC received 28 letters commenting on NYSE’s plan including from the Securities Industry and Financial Markets Association, Bats Global Markets Inc., UBS AG, TD Ameritrade Holding Corp. and Knight Capital Group Inc.
The proposals “raise novel market structure issues that warrant further comment,” the SEC said in a notice.
The programs would require an exemption from a rule that prevents exchanges from accepting orders priced in increments of less than 1 cent, the SEC said. They would also allow a new type of order to be available only to a subset of market participants, it said. Richard Adamonis, a spokesman for NYSE Euronext, said in an e-mail that the exchanges will respond “in the coming weeks.”
Individual investors and securities firms liquidating positions acquired from trading with retail brokers away from exchanges could use a new type of order as part of the program, according to the SEC. The inclusion of proprietary orders from brokers who traded with individual investors makes it “unclear whether the benefits of the sub-penny price improvement ultimately would reach the retail investor,” the agency said.
“Questions are raised as to the scope of the requested exemption under the sub-penny rule, and whether the exchanges have fairly and reasonably determined the subset of market participants that would be allowed to access retail price- improvement orders,” the SEC wrote in its notice.
--Editors: Joanna Ossinger, Peter Eichenbaum
To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
