The Securities and Exchange Commission agreed yesterday to delay by a few months some parts of its new order-handling rules that are aimed at revamping the Nasdaq stock market. But it did not change any major parts of the rules.
The rules, to be phased in starting Jan. 10, are intended to help investors get better prices on trades. Although the rules are aimed primarily at Nasdaq, they apply to all markets.
The rules call for quotes in so-called electronic markets, such as Instinet, to be posted on Nasdaq if those quotes are better than the ones available on Nasdaq; the SEC did not change that provision.
The original order called for trading in the 1,000 most active Nasdaq stocks to be subject to the new rules Jan. 10, but the revision cuts that figure to 50 stocks, with 100 to be added Jan. 31 and the other 850 Feb. 21.
Major stock markets have minimum quote increments, usually of one-eighth of a dollar for most stocks. But some electronic exchanges do not have such limits. So Instinet could have a bid on a stock of $25.0625, or one-sixteenth of a dollar more than the $25 bid on Nasdaq.
Current quote machines cannot display such small increments, so there would be no way to know that there was a better bid. So SEC required that the machines add an asterisk to the price, showing it as $25*, as an indication that a better price was available.
Pub Date: 11/23/96