Reg NMS Is a Winner, SEC Says

Traders Magazine, March, 2008 by Peter Chapman

The Securities and Exchange Commission, despite trader complaints about market fragmentation, pronounced Regulation NMS a triumph.

According to an analysis conducted by SEC economists, key market metrics such as speed, width of spreads and depth have all improved since Reg NMS went into effect. On top of that, institutional trading costs, as measured by independent researchers, came down as well, according to a top SEC official.

"All the statistics run counter to the commonly heard impression that increased fragmentation since Reg NMS has led to reduced liquidity," Dan Gray, market structure counsel in the SEC's Division of Trading and Markets, said in a speech at this year's Security Traders Association of Chicago (STAC) conference.

Regulation NMS, which...