COUNCIL CRITICIZES SEC PROPOSAL ON QUOTES FOR LISTED SECURITIES

by Council on Wage and Price Stability on October 6, 1976
by Council on Wage and Price Stability

Regulations proposed by the )ecurities and Exchange Commission which would require national securities exchanges to collect from their specialists, and national securities associations to collect from third market makers, quotations in eligible securities for dissemination to quotation vendors, were criticized today by the Council on Wage and Price Stability. The Council’s Acting Director William Lilley III stated that, “The Council has time and time again stressed the need for buyers and sellers in all markets to have adequate information and data. However, information for its own sake, when not compared against the cost of collecting and disseminating it, nor against the value it would bring to participants in the market place, is not necessarily a good thing. While the Council is sympathetic to Commission efforts aimed at making the securities markets more competitive, the Commission has not, to our knowledge, provided
evidence that this proposal would have such an effect. We are concerned that, since neither the benefits nor the costs of the SEC proposal are known, adoption of the proposal could be inflationary. We urge the SEC to undertake a more complete analysis of the proposal’s benefits and costs before proceeding further.” The Council’s comments were made
in a filing before the SEC.
The proposal, which would apply to exchange-listed securities, would require quotations subject to the rule to be “firm”; a specialist or third market maker would have to stand ready to execute a transaction in any amount up to the published quotation size (or, if no size is published, a normal unit of trading, usually 100 shares) at a price at least as
favorable to the buyer or seller as the published bid or ask quotation. The Commission is concerned that, in the absence of additional information, investors may not always be able to obtain the “best” price.

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