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SEC Report on Order Executions Released

NASDAQ faster for small orders, no difference on large orders. Spread differences also noted.

By John M. Baker, Esq.

On January 8, 2001 the SEC released a Report on the Comparison of Order Executions Across Equity Market Structures. The rather technical report, by its Office of Economic Analysis, essentially compares spreads and speed of execution for Nasdaq and the New York Stock Exchange.

In general, for small orders (100 to 499 shares), Nasdaq had noticeably faster executions but, except for the very largest companies (where spreads were about equal), noticeably wider effective spreads. For larger orders, Nasdaq’s speed advantage disappears and the NYSE’s cost advantage (except, strangely, for mid-sized companies) is reduced.

The SEC press release announcing the report, with links to the report and to a related speech by Chairman Levitt on the national market system, is available at http://www.sec.gov/news/ordrxm.htm

Copyright 2000, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to fundlaw-subscribe@egroups.com

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.  

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