NASDAQ Boxes Debut In City As Trading Capacity Expands

The National Association of Securities Dealers is installing its first quote terminals in London and boosting its trading capacity.

NASD has received seven orders for Level 3 NASDAQ terminals in London and expects 13 more by year-end, says Richard Justice, executive vice president, automation. The first Level 3 units -- which allow market makers to enter bids and offers -- will be shipped this month.

The U.K. terminals will offer the same service available in the U.S., including NASD's small order execution system. SOES handles customer orders of up to 1,000 shares for NASDAQ National Market System securities and up to 500 shares in other OTC stocks.

While it's installing NASDAQ in London, NASD is also talking with Securities and Exchange Commission staffers about reducing the number of screens that get free NASDAQ prices over the quotation link with the International Stock Exchange of London.

In April 1985, NASD began swapping quotes with the ISE under a pilot program. About 8,000 SEAQ and Topic terminals in the U.K. display Level 2 data -- which includes the full list of market-maker bid and ask quotes -- for nearly 300 NASDAQ stocks. The corresponding prices for about the same number of ISE-listed securities appear on 3,000 NASDAQ terminals in the U.S.

Under the proposed plan, only market makers participating in the NASDAQ-London link would continue to get prices gratis. As a result, the number of terminals in the U.K. carrying free NASDAQ quotes would drop to 900 and the number of NASDAQ terminals displaying ISE quotes would be reduced to 1,500.

The proposal is designed to satisfy critics who think the ISE shouldn't receive NASDAQ Level 2 prices at no charge when firms like Instinet Corp. have to pay cash for the same data. The SEC won't grant the NASD-London pilot permanent status until this issue has been resolved.

Meanwhile, to accommodate an expected increase in volume, NASD is upgrading systems at its main processing center in Trumbull, CT and its communications back-up facility in Rockville, MD. The improvements will double the number of shares NASD can process in a day from 200 million to more than 400 million.

At Trumbull, NASD is replacing its Sperry Univac 1184 mainframe computer with a model 1194, which has three times the capacity, says Justice. Both machines comprise four processing units. At Rockville, a model 1192 -- with only two processors -- will be taking over from the existing 1184 system. Because the Rockville facility acts as a backup to the Trumbull center, NASD decided it wasn't necessary to have four processors there, Justice says.