To paraphrase the late Eldridge Cleaver, the Black Panther leader, "You are either the problem or the solution." It seems that the SEC now knows that the market makers were the problem and the transparency of markets was the solution. The future of Direct Access Electronic Trading is now more secure. The environment for DAET will improve because the regulators will not reverse direction and return control of market regulation to anyone incapable of honoring the public trust. The SEC has forced the NASD (in lieu of a financial penalty) to commit to spend an aggregate of $100 million over 5 years to enhance enforcement, surveillance, and compliance with Nasdaq trading rules. In addition, the NASD was also ordered to:
Adopt a rule explicitly prohibiting improper market-maker coordination
Design and implement a state-of-the-art order audit trail to provide for better surveillance of trading rules
Improve surveillance and enforcement of trade reporting violations
Improve surveillance and enforcement of laws against backing-away violations, including the establishment of a complaint center to respond immediately to backing-away complaints
Improve the surveillance and examination of order handling to ensure that customer orders are executed appropriately
