Taking Stock At Nasdaq

NEW YORK: The SEC approved a sweeping set of reforms designed to increase confidence and bring more small investors into the Nasdaq Stock Market. Nasdaq, home to such high-tech firms as Netscape, and Microsoft, has experienced a wild growth boom as investors flock to tech stocks. But two government investigations earlier this summer turned up allegations that dealers were engaging in price-fixing by not allowing all investors news of the best prices on the electronically traded market. As a result of the investigation, Nasdaq was formally censured by the SEC and ordered to provide more oversight of dealers. The new rules require dealers to offer their customers better prices often available on electronic trading services like Instinet Corp. Customers are hailing the reforms as groundbreaking changes, the like of which have not been seen at the Nasdaq since the 1970's. The rules will save investors money (while cutting dealer profit margins), both by lowering fees and eliminating price-fixing. The reforms, instituted over howls of protest from Wall Street dealers, are not surface changes - the agency is changing the structure of Nasdaq, says TIME's Bernard Baumohl. "This is a positive development. It minimizes the chances that an individual investor will be ripped off, and improves the prices they will receive when buying and selling stock. Also, the rules do away with the collusion and price fixing that market makers at Nasdaq were alleged to have engaged in." -->