SEC Under Pressure To Slow Down On Multiple Options;Decisions Soon On Nasdaq Ticker And London Link

The Securities and Exchange Commission is receiving political pressure to hold off any action on its proposal to allow multiple trading in options on listed equities (MTR, July 1987). The SEC also expects decisions soon on two questions of interest to quote vendors -- the NASDAQ ticker and the NASDAQ-London link.

The update on quote-related SEC activities comes from Kathryn Natale, assistant director, Division of Market Regulation, who spoke at the recent Value-Added Market Data conference sponsored by Waters Information Services, Inc., publishers of MTR.

"On my desk I have a letter signed by four congresspersons asking us to hold up any action" on multiple trading of options, says Natale. As a result, the public hearing on the subject originally set for September 29th may have to be canceled. "But I'm not certain," she says. "The meeting may well go on."

The legislators are asking the SEC for further study and cost-benefit analyses before moving ahead on multiple options trading. Quote vendors have been worried about the issue because of the strain that additional data could put on storage and bandwidth.

The Commission staff has decided to take its ultimate recommendations on the NASDAQ ticker and the NASDAQ-London link to the full Commission for approval, says Natale. "We do expect to make a recommendation to the Commission by the end of the month [September]" on the London link, she says, and a decision on the NASDAQ ticker should be expected "within the next few months."

For its new National Market System last-sale ticker, NASDAQ proposes to charge subscribers $50/month for each wall display and $5/month for each terminal display. Subscribers would be liable for the fees not only for the official NASDAQ ticker, but also for any derived NASDAQ ticker generated by a quote vendor from underlying NASDAQ data, a plan to which some quote vendors object.

"The SEC, while it's mindful of the fact that such services may already be in existence," says Natale, "is caught in the middle of a very complicated controversy, and once again, we're left to weigh the competing interests."

Part of the controversy over the NASDAQ-London link, whose temporary extension expires September 30th, involves the terms for distributing NASDAQ Level 2 data to London. Instinet Corp. complains that London gets the NQDS feed under terms better than what Instinet itself can obtain. In an amendment to its request for a two-year extension, NASD agrees to limit gratis dissemination of quotes to market makers in those securities on the link (MTR, July 1987).

If the extension is granted, NASD promises to develop two-way dissemination of last sale reports as well as bids and offers, and to develop composite displays of market maker quotes from both markets.

The issue, as Natale sees it, is between pushing forward with the link -- however imperfect -- or sticking close to the SEC's mandate to maintain data availability.