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NASDAQ President Urges Reforms in US Stock Market - 2003-10-16


The president of one of the major stock markets in the United States, the NASDAQ, is in Washington to lobby for reforms that his organization says are needed in U.S. capital markets.

Robert Greifeld said U.S. stock exchanges need to be more transparent and competitive. The chief executive of the NASDAQ said U.S. stock exchanges need to be modernized. In a report released Wednesday, Mr. Greifeld said one critical area in need of reform is that of regulation.

The NASDAQ is lobbying the Securities and Exchange Commission, which oversees the U.S. stock markets, for a requirement that exchanges be monitored by outside regulators, instead of internally, as is now the case. He said times must change in the wake of accounting scandals such as the one at Enron, the now bankrupt U.S. energy trading company.

"We are of a fundamental belief that the regulator has to be separated from the market center," he said. "It's just inconceivable that in this post-Enron day, that you want the person who is being regulated to have any sort of financial interest in the regulator."

Although the NASDAQ is not itself separated from its regulator, Mr. Greifeld said his exchange has contracted for oversight with separate staff of its operator, the National Association of Securities Dealers.

The NASDAQ uses an all-electronic trading system and, unlike the New York Stock Exchange, has no trading floor where dealers buy and sell stocks in person. Mr. Greifeld said technology must be used in its competitors' markets, such as the New York Stock Exchange, to better share information.

"We want communication that happens on floor-based markets to be widely disseminated," said Mr. Greifeld. "When you look at a floor-based exchange today, there is proprietary [private] information that is passed between the specialists and the broker, and it's only passed between those folks. And that's an information advantage we think should be addressed. It doesn't fit again into the spirit of governance in a post-enron world."

Mr. Greifeld said technology exists, such as instant messaging, that would enable exchanges to broadcast and widely disburse information as it becomes available, so all investors have access to the same market data.

In the report, the NASDAQ also says American capital markets should make changes that enable trading to be more efficient and fast.

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