Printer Friendly
"There is a need for our regulatory framework to catch up with market developments to restore a level playing field in our trading markets," said Schumer in a press conference call Tuesday.
He pointed out that in 2001 ATSs and dark pools accounted for about 9 percent of trading while today they represent about 35 percent.
"These ATSs were good at the time they were created and I thought they should be encouraged " you have to have innovation," Schumer explained. "It's not anyone's goal to turn back the clock to a world dominated by the NYSE and Nasdaq. Both acknowledge the benefits of competitions but that has come at a cost. It has spawned dark pools and these darkened corners of the market undermine market transparency."
Schumer cautioned that as non-exchanges have "established a viable foothold in our market it's time to give them a second look and see what the potential risks are and make sure they're playing by a similar set of rules as traditional exchanges.
He also pointed out that ATSs are subject to a "barebones regulatory framework that is lacking many of the safeguards that exchanges have in place."
Duncan Neiderauer, chief executive of the NYSE was also on hand and said, "We are not against dark pools and we are not against internalization. We are in favor of competition and we understand when these rules were put in place exchanges needed the competition. All we've asked the SEC is that this competition must occur on a more level playing field."
"Right now the system doesn't allow us to innovate at the same speed as non-exchanges which have no approval process," said Neiderauer. "So we've asked the SEC to consider a convergence of that approach with similar rule marking processes and standards."
The SEC is scheduled to hold an open meeting tomorrow to consider recommendations on amendments to regulatory requirements around non-public trading venues such as dark pools.
More details on Schumer's official letter to SEC Chairman Mary Schapiro will follow.
