NYSE Asks SEC to Reject Link to New System
The New York Stock Exchange wants the Securities and Exchange Commission to reject the Pacific Exchange’s request to link OptiMark Technologies Inc.’s stock-trading system to other U.S. markets.
Instead, the Big Board urged the commission to force the exchanges to work together and create a plan to accommodate OptiMark’s method of trading.
OptiMark is a computerized system that lets big institutional investors anonymously trade stocks directly with one another through brokers, reducing the role of middlemen at the exchanges.
The San Francisco-based Pacific Exchange, which agreed earlier this year to use OptiMark, asked the SEC to propose a rule that would give OptiMark’s system access to the Intermarket Trading System after months of connection negotiations with the NYSE failed. The ITS links U.S. exchanges and is designed to let investors get the best possible prices when they want to buy or sell shares.
The SEC in July proposed amending ITS rules to include OptiMark, saying it would help promote “efficient execution of securities transactions, fair competition among markets, the best execution of customer orders and an opportunity for orders to be executed without the participation of a dealer.”
In a letter earlier this week opposing the rule change, the NYSE said Durango, Colo.-based OptiMark and the Pacific Exchange are seeking to use the ITS “as a proprietary order-routing system for their competitive advantage.”
The Big Board said ITS members should continue negotiating whether to include OptiMark. The NYSE’s comments were reported in Thursday’s Wall Street Journal.
Pacific Exchange spokesman Dale Carlson said there’s no reason to think more meetings would produce results.
“We’ve been down that path,” Carlson said. “It’s a road to nowhere.”
Currently, changes to ITS can be made only by unanimous decisions of its operating committee, made up of representatives from U.S. stock markets. The SEC has proposed changing that to require only a two-thirds majority of votes.
