(Repeats to fix typo in 9th paragraph)
By Sarah N. Lynch
WASHINGTON, July 8 In a perfect world, stock
exchanges would collectively agree to ban order types that
critics have alleged create complexity and may give certain
traders unfair advantages, Intercontinental Exchange Group
chief executive Jeffrey Sprecher told lawmakers on
"I am uncomfortable with having all of these order types. I
don't know why we have them. And I have started to unilaterally
eliminate them," said Sprecher, whose company owns and operates
the New York Stock Exchange.
"I hope other exchange leaders will follow my lead. I'd like
to get us all working together to eliminate these types. I would
be happy if we can do it as a private-sector initiative. I would
be happy if the (Securities and Exchange Commission) orders us
to get rid of them. I would be happy if Congress took action,"
Sprecher's comments, made at a U.S. Senate Banking Committee
hearing, come just a few weeks after another NYSE official
announced that the exchange was imposing a six-month moratorium
on permitting any "new or novel" order types.
Earlier this year, the exchange operator also announced it
was planning to eliminate at least 15 different order types in
an effort to simplify the marketplace.
An order type, such as a limit or market order, allows
investors to stipulate certain conditions, such as price. The
major exchanges have dozens of order types, though many offer
Exchanges typically must get a sign-off from regulators at
the SEC before a new order type can be introduced.
But in recent years, critics have questioned whether more
sophisticated investors, including high-speed traders, have been
able to better grasp how order types work and use them to gain
an edge over less savvy investors.
The SEC has been investigating order types, among other
areas of equity market structure. The SEC is also looking at
whether to include exchanges' disclosures about how order types
work are aligned with the way they operate in the marketplace.
Earlier this year, SEC Chair Mary Jo White announced that
she would like exchanges to undertake a broad review of the
order types offered to customers.
Sprecher told lawmakers that while he would ideally love to
get rid of order types, the competitive market reality dictates
that he cannot do away with them entirely.
For instance, BATS Global Markets - one of NYSE's top
competitors - also offers numerous order types, and so far has
not made any calls for a ban.
"I am trying to balance cleaning up my own house," Sprecher
told lawmakers. "I live in a glass house. I am trying to clean
it up before I criticize others. At the same time, I can't make
the New York Stock Exchange go to zero."
(Reporting by Sarah N. Lynch; additional reporting by Herbert
Lash in New York)