Thursday, December 09, 2004

Regulation NMS and its Impact on Issuers

Yesterday, CFO Magazine published a story titled, "How SEC's Market Reform Affects CFOs." The article is chock-full of quotes from industry insiders and former SEC officials. You can read it here: Of particular interest is this insight from Michael Panzner, head of sales trading for Rabo Securities USA:

"But don't expect such market efficiency anytime soon. Panzner notes that while the rules' sweeping of the market sounds great in theory, an electronic linking of various markets is contingent on the participants agreeing and getting the technology in place first. 'Both, in my view, will take an extraordinary amount of time,' he says."

First, ArcaEx is well positioned for these potential reforms. Accordingly, their "property value" will increase as the laws of supply and demand take shape. The demand will be there, but the supply is anemic. A week from yesterday the SEC meets to discuss their latest proposal. It should be interesting to watch the popular media shift some attention to this major event. To be sure, when these changes are announced it will likely seem like it came out of nowhere. My hunch is that AX's volume might seem like it came out of nowhere as well!


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