Trading and Investing

By Theresa Carey  |  Posted 2004-12-30 Print this article Print

Trading and investing are a key part of the financial industry. The regulators have been busy in this space this year, while SROs (self-regulated organizations) have been trying to stay a step ahead. SROs include the NYSE (New York Stock Exchange), AMEX (American Stock Exchange) and the NASD (National Association of Securities Dealers), which monitors the trading activity in Nasdaq markets. The NYSE has proposed expanding its "hybrid market," which combines an electronic exchange such as that provided by Nasdaq with its traditional auction model.
A recent filing with the SEC (Securities and Exchange Commission) details the rules governing automatic-execution orders, sweeps of the limit-order book, specialist and broker interest files and algorithms, and other features of the hybrid market such as "liquidity replenishment points"–the points at which the auction will have an opportunity to supply liquidity to dampen volatility.
Also included are multiple, specific examples on how orders will be handled under various trading scenarios. The existing system will require significant changes and enhancements that will take some time to deliver, which is good news for IT providers to the exchange. According to industry insiders, the push toward an expansion of Direct+ is being greeted with much enthusiasm. Those who create regulations are still hard at work, coming up with more rules that will benefit the financial IT industry. Accounting software suppliers will be making some as-yet-undefined changes to their programs to comply with a recent decision made by the FASB (Financial Accounting Standards Board). Public companies are being asked to start expensing options beginning with their first fiscal reporting period after June 15, 2005. Private companies and companies that file as small business issuers are not required to comply until after Dec. 15, 2005. Click here to read about how the struggle for Sarbanes-Oxley compliance took its toll on a real estate company. The new rules, according to the FASB, are intended to provide investors and other users of financial statements with more complete and unbiased financial information. Critics of the proposal say the rules are difficult to interpret and will hurt tech firms that use stock options as a key component of employee remuneration. Accounting software publishers need to stay on top of the progress of this ruling so they can figure out how (or whether) to rewrite their code to give their customers the necessary tools. What gift will the industry get next from legislators and regulators? Stay tuned. Check out eWEEK.coms for the latest news, views and analysis on financial applications and services for the enterprise and small businesses.

Theresa is the Editor of's Finance Industry Center. She's been writing about financial technology issues since 1990 for a wide variety of publications, including PC Magazine, Newsweek, Fortune, and Fortune Small Business. She is also a Contributing Editor to Barron's and writes their 'Electronic Investor' column.

Theresa received a B.A. from the University of California, Berkeley, and a M.S. from the University of Santa Clara. She also has a private pilot's license. When she's not at her computer, she coaches a local high school volleyball team, plays softball and volleyball, and takes part in many Cal Alumni Band events. She lives in Northern California.


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