Nasdaq Officials Are Discussing Market Revamp
Seeking to head off potentially harsh sanctions by the government, senior Nasdaq Stock Market officials have been huddling with Wall Street securities firms on various proposals aimed at revamping the market, according to people familiar with the situation.</br></br>While the details of the proposals have not been disclosed or presented to the board of the National Association of Securities Dealers, they are believed to focus on the need to narrow trading "spreads," or the difference between the bid and asked prices of individual stocks, and to improve order execution for small investors on the screen-based Nasdaq market.</br></br>The NASD is a self-regulatory organization that owns and operates Nasdaq, the nation's second-largest stock market behind the New York Stock Exchange.</br></br>The tentative proposals being circulated among Nasdaq firms are the first apparent effort by the NASD to respond actively to stinging criticisms leveled against the market in the past year. An academic study last May alleged price-fixing among Nasdaq market makers. Subsequently, both the Justice Department and the Securities and Exchange Commission opened investigations into Nasdaq trading practices.</br></br>The NASD and member firms have denied any wrongdoing and say that dealers will be vindicated. But the proposals under discussion appear to be aimed at anticipating any regulatory changes that may be forced upon the sprawling dealer market.