Regulation National Market System (NMS) introduced a new system of regulation for exchanges in the United States and the European Union to aid trading in equities and exchange traded funds (ETFs).
There are new requirements that will supplement a better execution of electronic trading, which has dominated the ETF trading platform. The program is the Markets in Financial Instruments Directive (Mifid). It’s intended to break the incumbent exchanges’ dominance over share transactions.
HedgeWeek reports that Reg NMS will require an equity exchange to demonstrate that it has done everything possible to prevent trade-throughs, the execution of an order in its market at a price that is worse than a price available in another market. This requirement favors electronic trading over the traditional cry-out and has allowed start-ups to challenge the dominance of NYSE Euronext and Nasdaq. This is a great protection for the investor.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.