Exchange Status for Nasdaq Is Proposed

The Securities and Exchange Commission on Tuesday proposed granting exchange status to the Nasdaq Stock Market, a step that would allow the computerized trading system to gain independence from its parent, the NASD.

The proposal may end a five-year logjam for Nasdaq, which was created as a NASD subsidiary in 1971. The shift in legal status, applied for by Nasdaq in 2000, would sever its ties with the NASD (formerly the National Assn. of Securities Dealers) and enable it to become a fully independent market -- giving it more flexibility in competing with the New York Stock Exchange.

The application was delayed mainly because of a dispute over how Nasdaq handles orders to buy or sell a stock when it hits a specified price. Nasdaq and regulators are working on a solution that would retain NASD oversight of certain trades.

Nasdaq Chief Executive Robert Greifeld has said that gaining exchange status would allow Nasdaq to make decisions more quickly because its board wouldn’t have to seek approval from NASD directors. The SEC will gather public comment on the proposal for 30 days before making a final determination.

Nasdaq’s shares rose 10 cents to a record high of $26.06.