Capital Markets

SEC Commissioner Foresees Rules Delay

''I don't think we can make the June deadline'' for implementing Reg NMS.
Stephen TaubMarch 14, 2006

The Securities and Exchange Commission’s deadline to implement Regulation National Market System is not likely to be met, SEC commissioner Annette Nazareth told Reuters.

In April 2005, the commission voted 3-to-2 to adopt Reg NMS, which will institute a number of stock-pricing and stock-trading reforms. One reform would require that all investor trades be executed at the best price, even if stock markets must fill the order through a competitor.

The compliance date for the stock of 250 large companies is June 29, noted Reuters; others are expected to be in compliance by August 31.

Nazareth, after a speech at an Institute of International Bankers conference, told reporters: “I don’t think we can make the June deadline. There’s a lot of detailed work involved in both the markets coming up with rules and the brokerage firms [having] to program their systems to meet those rules.”

Under the new rule, the wire service explained, traders can ignore the best price if it is available only on a “slow market” such as the New York Stock Exchange trading floor. The Big Board, of course, recently completed an acquisition of the electronic exchange Archipelago, partly in response to such concerns.

Brokerages have been seeking delays in implementing Reg NMS, according to Reuters, so they can properly reconfigure their trading and surveillance systems.

Nazareth reportedly confirmed that the SEC is working with the markets and firms to come up with implementation guidance in case the deadline cannot be met.

“The good news is I think there is a lot of progress being made,” she added, according to Reuters. “I think we just need to come up with realistic deadlines in concert with the markets and the industry for the rollout.”