Regulator Welcomes Suggestions Sec Asks Public For Ideas On Future Trading Systems

Federal securities regulators, hoping to keep pace with dramatic changes in the nation’s stock markets brought by technology, are seeking ideas on how they should supervise markets in the future.

The four members of the Securities and Exchange Commission voted unanimously Friday to issue a “concept release” soliciting public comment on regulation of so-called alternative trading systems and foreign stock exchange activities in the United States as well as more traditional U.S. stock markets.

“We seek a forward-looking and enduring approach that will permit diverse markets to evolve and compete, while preserving marketwide transparency, oversight and fairness,” SEC Chairman Arthur Levitt Jr. said before the vote. “While technology has changed, the principal goals of regulation remain the same - to protect investors and to ensure our markets are fair and orderly.”

“We really approach this with a totally open mind,” Levitt said.

The changes under consideration would mark the biggest shift in the way the SEC regulates stock markets since the agency’s formation in 1934, said Richard Lindsey, director of the SEC’s division of market regulation.

“Paper and pen technology has gone the way of the crossbow. Our regulatory scheme must be reassessed to allow new technologies to flourish.”

The SEC proposals include:

Establishing a class of smaller, exempt stock exchanges that are supervised by a self-regulatory organization and have limited disclosure requirements.

Finding new ways to regulate investors’ access to foreign stock markets that want to do business in the United States.

Setting up three levels of market regulation: one for the smaller, exempt exchanges; another for the biggest alternative trading systems, not now regulated as markets; and the third for traditional markets such as the New York Stock Exchange.