New York Stock Exchange president William Batten, yesterday unveiled, with apparent reluctance, the exchange's proposal for a national market system while repeating his opposition to the repeal of the ban on off-board trading.
In testimony before the Securities and Exchange Commission, Batten criticized the congressional mandate for such a central market of different exchanges trading the same security.
He noted that an economist's "ideal conception" of securities trading envisions the collection of all orders to buy and sell. The federal mandate and the changas now under review by the SEC are contrary to this ideal, he said.
The NYSE developed the decentralized, national plan in response to the SEC's proposal to repeal the off-board trading rules, which prohibit brokers from trading outside of an exchange.
The NYSE proposal would electronically link competing qualified brokers in competing market centers - initially these would be the exchanges and the National Association of Securities Dealers.
An electronic databank would provide up-to-the-minute price and volume information. Brokers would be allowed to trade with non-professional investors outside of market centers only at a price less than that on the composite quotations system at the time of the trade.
Batten said the repeal of the off-board restrictions could accelerate the trend of small brokerage firms merging with larger ones, leading to over-concentration in the industry.
But Harold Williams, SEC chairman, said the agency is prohibited by law from considering the economic impact of proposed changes in the off-board rules. He added that the commission has a mandate from Congress to end anti-competitive practices in the securities markets and cannot anticipate what the impact will be on a particular broker or exchange.