April 06, 2005

CRAPO: DIVISIVE SEC VOTE SIGNALS TROUBLE AHEAD

Senator considering legislation to stop extension of trade-through rule

Washington, DC â?? Idaho Senator Mike Crapo (R-Idaho), a member of the Senate Banking Committee, expressed disappointment today after a divided Securities and Exchange Commission (SEC) voted 3-2 to approve the Regulation NMS (National Market Structure) rule. The new set of regulations for stock market trading in the U.S. will significantly change the way trading occurs in the country and removes a level of investor involvement and choice. The proposed trade-through rule will dictate at what price orders are executed, with regard only to best quote and without regard to other crucial factors such as depth of trading interest, market efficiency, market impact, and firmness of quotes.Crapo said he is considering all options, including legislation, to stop the divisive mandates to allow more collaboration in creating revisions to the national market structureâ??I am disappointed and troubled that the Commission was unable to proceed with one voice on this important rule,â?? Crapo said. â??The lack of consensus within the commission, academics, and capital markets experts questions the need of going forward and raises the possibility that Congress should intervene. The vote today approved a rule that has no consensus inside or outside the SEC. While there does appear to be agreement that several courses of action need further study, the vote was still pushed forward and the rule had been adopted by a deeply-divided SEC. There appears to be growing support for congressional action at this point and I am evaluating all options including legislation to address this matter.â??Crapo, along with other Senators, sent a letter [pdf 2 pages, 51 kb] to the SEC regarding the Reg NMS rule. The letter addressed several other possible courses of action that deserved consideration and further study. A copy of that letter accompanies this news release.