SEC Set to Move on Centralized Market

The Securities and Exchange Commission plans to issue a preliminary proposal within the next two weeks to form a central national stock market by expanding the electronic links among competing U.S. markets, officials said Friday.

“This is the most contentious securities issue in recent years,” SEC Chairman Arthur Levitt said. “Everyone’s pointing a finger at everyone else--little firms at big firms, big firms at little firms--saying our proposal would favor them. But I think we’re really moving the ball forward on this one.”

The proposal, called a “concept release,” would ask the securities industry to comment on centralizing the display and trading of “limit orders,” or customer orders at specified prices. Levitt first discussed plans to issue such a release in October but didn’t say when the commission would put the plan out for initial industry comment.

One issue to be addressed, Levitt has said, is whether a central market should display only limit orders, or whether it also should provide opportunities for them to be executed.

Stock trading has become increasingly fragmented in recent years with the growth of electronic trading networks. Many orders go unfilled because they can’t be matched with similar orders on other networks.