Running Exchanges Is Too Hard, Exchange Chiefs Say

U.S. exchanges have become a handful to handle. It seems that all of the order types they've instituted over the years to keep customers and regulators happy may have had the opposite result. But it's not Elizabeth Warren or Bernie Sanders or some other Capitol Hill communist levying these charges. It's the exchanges themselves. And rather than doing something about the things they've done to make themselves "overly complex and opaque" at the expense of ordinary investors, they'd prefer to have Congress make them do something.
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U.S. exchanges have become a handful to handle. It seems that all of the order types they've instituted over the years to keep customers and regulators happy may have had the opposite result.

But it's not Elizabeth Warren or Bernie Sanders or some other Capitol Hill communist levying these charges. It's the exchanges themselves. And rather than doing something about the things they've done to make themselves "overly complex and opaque" at the expense of ordinary investors, they'd prefer to have Congress make them do something.

Joe Mecane, head of U.S. equities at NYSE Euronext, told the committee that some of the exchange operator's order types were designed to comply with regulations, while others were written to "guarantee economic results" for clients. Mr. Mecane noted that the SEC had approved all of the order types his and other exchanges offer.

Mr. Mecane conceded that the boom in order types shows that the stock market has become overly complex. He recommended a "holistic review of market structure" to address concerns that stock trading has become too risky and confusing to ordinary investors.

Yesterday's hearing before the Senate Banking Committee was called primarily to give its members a chance to grandstand about the dangers of high-speed trading. Nasdaq OMX Group's Eric Noll even "cautioned against vilifying high-speed traders." But the senators were by then on to fresh meat, which is just as well, since there are nootherproblems to speak of at the markets.

"The proliferation of order types adds complexity and raises lots of questions," Sen. Jack Reed, who chaired the hearing, said.

Exchanges Fault Complexity [WSJ]

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