NEW YORK -- Securities market leaders should begin discussions on how best to develop a central market for trading domestic stocks, said the chairman of the Securities and Exchange Commission.
In a late September address at Columbia University Law School in New York, Arthur Levitt said: "Tonight, I call upon the leaders of the securities markets -- particularly the public representatives on exchange boards -- to begin a public dialogue on whether technology offers ways to garner the benefit of centrality without stifling competition."
Mr. Levitt also called for the repeal of New York Stock Exchange Rule 390, which prohibits NYSE members from dealing in listed securities off an exchange. He said the rule distorts competition and introduces artificial costs.
"Others contend that the rule is an anticompetitive use of market power by a dominant market," said Mr. Levitt.
"How could such an anticompetitive rule be sustained should the NYSE become a for-profit corporation?"
And, he said, self-regulation by the NYSE and the Nasdaq should be abolished as the two exchanges proceed with their plans to demutualize.
"The potential for conflicts of interest that may arise if the SRO (Self Regulatory Organization) is enmeshed within a for-profit corporation must be defused," said Mr. Levitt. "At the very least, I believe that strict corporate separation of the self-regulatory role from the marketplace it regulates is a minimum for the protection of investors overseen by a single SRO."
