Downloadable PDF: Better Markets Amicus Brief: NY Stock Exchange v. SEC

Pilot (definition): Rule 610T of Regulation NMS, Transaction Fee Pilot for NMS Stocks

Evoking images of the Wizard of Oz, the Petitioners insist that the SEC must not be allowed to look behind the curtain of complexity and secrecy that surrounds today’s enormously convoluted equity markets, all for fear that their established and profitable pricing and trading practices will be exposed as unfair and abusive and then curtailed or abolished.  But Congress specifically charged the SEC above all with protecting investors and market integrity, and the Pilot is a vital step toward discharging those duties.  By peeling back the curtain on exchange pricing practices, the SEC will be better able to understand the predominant fee and rebate system that creates intense conflicts of interest, compromises brokers’ duty of best execution, and facilitates the predatory behavior of high-frequency traders who feed on retail trading volume lured by the rebate system.  The results of the Pilot will lay the foundation for a well-informed, long-term regulatory solution to these abuses, one that is carefully calibrated to maximize investor protection and market integrity while minimizing market disruption.  And the Pilot achieves this goal through measures that are strictly limited in time and scope.