Latin American Capital Markets

180 RUBEN LEEquestion arises as to whether and how information about quotes and trades shouldbe consolidated.The jurisdiction that has been most aggressive in mandating the publicationand consolidation of prices and quotes is the United States, via its NationalMarket System (NMS).The concept of the NMS may be viewed both as a set of objectivesthat Congress ordered the Securities and Exchange Commission (SEC) topursue and as the institutions that have been established in order to deliver these objectives.25 The U.S. Congress found that it is in the public interest and appropriate forthe protection of investors and the maintenance of fair and orderly markets to ensurethe following:• Economically efficient execution of securities transactions• Fair competition among brokers and dealers, among exchange markets, andbetween exchange markets and other markets• The availability to brokers, dealers, and investors of information with respectto securities quotations and transactions• The practicability of brokers executing investors' orders in the best market,and the opportunity, consistent with the [above] provisions, for investors' ordersto be executed without the participation of a dealer 26The SEC initially passed three key rules to implement the NMS goals with regardto the dissemination of price and quote information: the last-sale rule, the quoterule, and the display rule.The last-sale rule requires that a report be published of alltrades in national market securities. 27 Such securities include all exchange-listed stocksand the largest NASDAQ stocks. 28 The price and volume of the transaction and themarketplace where each transaction is executed must be reported. No vendor maybe prohibited from retransmitting the data available from a transaction reporting plan,provided the vendor pays the appropriate fees.The firm quotation or quote rule requires each broker or dealer to communicatepromptly to its exchange its best bids and offers and associated quotation sizesfor all relevant securities. It also requires that each exchange make available to quotationvendors the highest bid and the lowest offer for the relevant securities, plus thequotation size or aggregate quotation size. 29 The aggregate quotation size is the sum25 The SEC has imposed many obligations on exchanges and other market participants to implement the price andquote dissemination elements of the NMS that are not discussed here."Section 11 (A), SEA (1934).27 Section240.IIAa3-l,CF.R28 Those aspects of the NMS that refer to NASDAQ stocks are for the most part ignored in the rest of this section.29 Section 240.11 Ac I-1, C.F.R.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub