Nasdaq Board Powers Eroded., Report Says: Traders' Committee Said to Control Market
Deep inside the study of the Nasdaq stock market issued this week is a revealing explanation of who really runs the nationÛªs second-largest stock market.</br></br>It is not the board of directors of the National Association of Securities Dealers, which owns the market, nor the board of Nasdaq itself, but a powerful committee of traders that has largely usurped the authority of both boards, said the committee, led by former senator Warren B. Rudman (R- ÛÏThe review turned up no instance in which the NASD board itself initiated a major policy or rule for the Nasdaq market," the panel reported.</br></br>Most of those interviewed for its study characterized the Nasdaq board as having ÛÏless influence than certain NASD committees ... and little if any authority over the Nasdaq market and systems.Û</br></br>work belter for investors and corporations have been repeatedly blockedÛÓ sometimes for yearsÛÓby the NASDÛªs trading committee, made up of executives of 18 big firms that deal in Nasdaq stocks, according to the report. The Washington-based organization is facing public criticism as well as federal investigations over allegations that small investors fail to get the best prices on stocks and that conflicts of interest prevent it from operating efficiently. NASD officials deny the accusations.</br></br>After studying Nasdaq since last December, RudmanÛªs panel issued a report on Tuesday that calls for separating the operation of the Nasdaq market from the NASDÛªs duties as a regulatory entity.