Securities Market Operations: The Effects of SOES on the Nasdaq Market
GGD-98-194
Published: Aug 31, 1998. Publicly Released: Aug 31, 1998.
Skip to Highlights
Highlights
Pursuant to a congressional request, GAO provided information on the Small Order Execution System (SOES) and its effects on the Nasdaq Stock Market, focusing on the: (1) extent to which SOES is being used for its intended purpose; (2) effects of SOES on the marketplace; (3) results of attempts to limit trading on SOES or replace SOES; and (4) effects of recent market developments and proposals affecting SOES.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Securities and Exchange Commission | The Chairman, SEC, should ensure that any trading system approved to replace the current Nasdaq trading systems be designed to correct the trading advantage available to SOES day traders and provide for the immediate, automatic execution of investors' small orders at the best possible prices. |
Closed – Implemented
In January 2001, SEC approved a new trading system, SuperMontage, which will eventually replace Nasdaq's current SuperSOES and SelectNet services with two new processes: a directed order process and a non-directed order process. In the interim, NASD phased-in SuperSOES, which accepts orders up to 999,999 shares at a time.
|
| United States Securities and Exchange Commission | The Chairman, SEC, should require Nasdaq to provide adequate data analysis to support aspects of the system that may affect market efficiency and discipline. |
Closed – Implemented
SuperSOES, which replaces SOES, was implemented in July 2001.
|
Full Report
Office of Public Affairs
Topics
Antitrust lawBrokerage industryInformation systemsRestrictive trade practicesSecurities regulationStock exchangesTrade regulationStocksSecuritiesBid proposals