The Securities and Exchange Commission is further extending the comment period on its proposed national stockmarket reforms (regulation NMS) after receiving bitter complaints from market participants over last-minute changes to the original proposals.
Regulation NMS is the product of years of consideration by the US watchdog of equity market structure issues, as well as an extensive public dialogue over the course of the past year. Much of the debate hinges around rule changes that, under certain market conditions, would have enabled faster markets to disregard the requirements to provide the 'best price' in favour of speed of execution. The proposals, decried by market-making specialists on the floor of the New York Stock Exchange, effectively forced the Nyse to introduce its own plans for a faster, more automated hybrid market.
After reviewing more than 700 comment letters on the Regulation NMS proposal and the supplementary request for comment, and considering the views expressed at an April public hearing, SEC staff in recent weeks redrafted the proposals to include a 'depth of book' component that would require every market to display every available order, rather than just the best price. This would permit customers to have an order filled at various markets after the best price posted by each one.
As news of the changes leaked out, market participants expressed their displeasure at the lack of consultation, forcing the SEC to issue a statement late yesterday: "The Staff intends to recommend that the Commission publish Regulation NMS in its revised form to provide the public an opportunity to review the details before the Commission takes final action. The comment period would be followed by Commission action early next year."