Federal securities regulators are reportedly scheduled to vote Dec. 15 on reforms to the national market system, including a provision requiring brokers to execute customer orders at the best price available regardless of which exchange that price exists on.
The Securities and Exchange Commission is expected to adopt a comprehensive set of rules known as Reg MS that will update how markets function. Their primary aim is to allow for the implementation of more efficient electronic trading platforms. The final draft of Reg MS is quite different from the preliminary proposal floated on Feb. 24.
The proposed rule requires that brokers must execute most orders at the best price available on the New York Stock Exchange and Nasdaq, provided that the orders can be filled automatically.
While the vote is scheduled for Dec. 15, it could be postponed if the NYSE, fund giant Fidelity Investments and at least two SEC commissioners can get more time to consider the proposal. As with other controversial proposed rulemakings, there is some resistance among the five SEC commissioners on Reg MS, but Chairman William Donaldson is expected to push it through, as he did with mutual fund governance rules and hedge fund registration.
The decision on Reg MS comes amid a huge power play for market share among the Big Board, Nasdaq and electronic exchanges powered by Archipelago and Instinet.