A couple of articles of interest came out this afternoon about our objections to practices that Larry Leibowitz mentioned in a speech last week, which I posted earlier today.

One article, from Bloomberg: “NYSE Asks SEC to Strike Down Nasdaq, Bats Plan to Hold Orders” Sorry, no link available. Excerpt:

NYSE Euronext, the world’s largest stock exchange, asked U.S. regulators to stop rivals Nasdaq OMX Group Inc. and Bats Exchange Inc. from introducing a feature to hold orders for a fraction of a second, claiming it will lead to investors getting worse prices for stocks.
The Securities and Exchange Commission should strike down Nasdaq’s May 6 plan to hold orders and prevent Bats from adopting a similar feature, NYSE Euronext said in a letter posted today on the agency’s Web site. Nasdaq and Bats want to give customers an additional opportunity to fill an order before the market ships the trade to other exchanges with the best price.
… In 2005, the SEC imposed rules that require exchanges to route orders to the market that has the best price. The agency should review whether the introduction of mechanisms that delay the routing will hurt investors, NYSE Euronext said in the letter.
“The potential widespread use of holding orders by multiple market centers would impede the free and open market system” contemplated by the 2005 rules, the NYSE said. …

The other article: “NYSE Euronext Takes ‘Dark Pool’ Complaints to SEC,” from Dow Jones Newswires, via WSJ.com. Excerpt:

… In a letter to SEC Secretary Elizabeth Murphy, the operator of the New York Stock Exchange alleged that new order types developed by Nasdaq OMX Group (NDAQ) and BATS Exchange could hurt the investing public, and urged tougher oversight for private pools of liquidity.
… Critics argue that, as a greater amount of stock trades are executed away from public markets, exchange-listed stock prices become a less accurate gauge of market sentiment.
In its letter, NYSE Euronext said that routing stock orders through dark pools also delays execution and makes it harder for authorities to track market activity. …

For more perspective, I urge you to read our letter, which I think makes clear that we’re not criticizing dark pools — we own dark pools ourselves, as the latter article point out — rather, we’re criticizing certain, specific practices proposed by NASDAQ and BATS. As the letter says, they’re seeking “to:modify their respective routing strategies to provide preferential treatment for their own market participants before routing orders to away markets.

“As described more fully below, NYSE Euronext believes that the time is ripe for the Securities and Exchange Commission (“Commission”) to review not just the proposed Nasdaq and BATS functionality, but similar trading functionality used by registered alternative trading systems (“ATS”) that provide non-public order information to a select class of market participants at the expense of a free and open market system. Pending such market-wide review, NYSE Euronext respectfully urges the Commission to abrogate the above-referenced Nasdaq filing and reject the BATS filings as not non-controversial.”

Your comments are welcome below. And yes, I’ll bother you no more today.