Opinion ID: 8410533
Heading Depth: 2
Heading Rank: 1

Heading: National Securities Exchanges

Text: Prior to 1975, the national securities exchanges operated independently from one another such that stocks listed on one registered exchange might trade at a different price on a different exchange. To mitigate this problem, Congress amended the Exchange Act in 1975 to mandate the creation of a unified “national market system” (“NMS”). See 15 U.S.C. § 78k-l(a). Congress conferred on the SEC broad authority to oversee the SROs’ “planning, developing, operating, or regulating” of the national market system. Id. § 78k-1(a)(3)(B). The SEC then promulgated a series of regulations, culminating in 2005 with Regulation NMS, “to modernize and strengthen the national market system ... for equity securities.” Regulation NMS, 70 Fed. Reg. 37,496, 37,496 (June 29, 2005) (codified at 17 C.F.R. § 242.600 et seq.) [hereinafter “Regulation NMS”]). The SEC emphasized that a national market system must “meet the needs of longer-term investors” because any other outcome would be “contrary to the Exchange Act and its objectives of promoting fair and efficient markets that serve the public interest.” Id. at 37,500 (noting the Exchange Act’s “core concern for the welfare of long-term investors who depend on equity investments to meet their financial goals”). The SEC distinguished such long-term investors from short-term speculators who hold stock “for a few seconds.” Id. In furtherance of these objectives, the SEC required that the exchanges distribute core market data on “terms that are fair and reasonable” and “not unreasonably discriminatory.” 17 C.F.R. § 242.603(a)(1), (2). The SEC also required that exchanges and brokers accept the most competitive “bid” or “offer” price posted at any trading venue, to ensure that investors would receive the best prices, and that the exchanges inform the investing public of the national best “bid” and “offer” price by displaying it on their consolidated data feeds. See id. §§ 242.601-603.