Nasdaq Parent OKs New Trading System

The parent of the Nasdaq Stock Market has approved a new small-order trading system that would offer average investors greater protections for handling of customer orders, an official said Monday.

The National Assn. of Securities Dealers Inc., which owns and operates Nasdaq, as expected approved the new system, called “N.Aqcess,” at a weekend meeting in Bigfork, Mont., said John Pinto, an NASD executive vice president.

But Pinto didn’t provide details about how the final trading system will work. Nasdaq spokesmen said late Monday they aren’t prepared to release further information on the new trading system.

In March, the NASD announced it would unveil later this year a new system that would permit automatic trading of an investor’s limit orders. Limit orders are customers’ instructions to brokers to buy or sell stock at a specific price.

Investors have complained that large Nasdaq firms put their interests ahead of their customers’ in handling limit orders.

The “N.Aqcess” system, as proposed, would distribute an investor’s limit order of 3,000 shares or less to computer screens throughout the Nasdaq market, the nation’s second-largest stock market. If a buy order matched the price of a corresponding sell order, the trade would be executed automatically--without interference of a dealer.

Details of the complex system are expected later this week. The NASD must send the proposal to the Securities and Exchange Commission for approval.

Separately, the NASD also approved so-called “suitability” guidelines for Wall Street firms would require brokerages to determine whether their customers have the expertise and resources to make informed decisions about investments.