Chairman Harold Williams of the Securities and Exchange Commission said yesterday his agency is taking an "evolutionary approach" to developing a national stock market system, which was mandated by Congress four years ago.

Williams and four other SEC commissioners testified before a House Commerce subcommittee on what progress has been made in carrying out the 1975 Congressional mandate.

Judging by their testimony, the national market system remains a blurred concept after four years. Williams, a former academic, told the handful of Congressmen present for the hearing:

"The commission cannot, at the present, responsibly construct a comprehensive plan for the development of a national market system. This conclusion arises not from a lack of technological expertise, but because the major and complex policy concerns which will define the essential characteristics of that system have not been resolved at this time."

But Rep. James Scheuer (D-N.Y.) voiced concern about the apparent lack of progress. He said that securities markets were being developed in the Middle East and in Japan that, once the technology is available, might draw investors away from the U.S. markets.

"Our capital markets are quite good now," said Williams.

"Quite good may not be good enough," answered Scheuer, who said that technological improvements could make the foreign markets a threat to the United States. "A phone call could be an investor in touch with a broker who deals with foreign markets," he said.

"Technology doesn't make for better markets," said Williams, who added that "trust and confidence . . . not new technology is the important measure of . . . a market."

The SEC yesterday announced a 3-year extension of two experimental efforts aimed at moving the stock market toward a national system.

The commission extended the experimental electronic link between six major exchanges called the Intermarket Trading System. It also announced an extension of the Cincinnati Stock Exchange's totally electronic trading system.

At the same time, the SEC said it was troubled by the failure of the six ITS exchanges to execute orders carried on the system.

An ITS broker at one member exchange can place an order electronically for a stock at another member exchange. The six members are the New York, American, Midwest, Pacific, Philadelphia, and Boston Stock Exchanges.