Sometimes, time is on your side; sometimes, it's not. When it comes to Reg NMS, at this point, time is not something that the securities industry has in abundance. Much like the previous Y2K and decimalization deadlines, time is ticking.
Many firms have been working internally to determine Reg NMS strategies and resulting systems upgrades. And many of the same firms also have been working with industry groups to try to figure out just exactly what the Reg NMS rules mean (see cover story, page 38). However, there still is a great deal of fog surrounding the regulation. As a result, firms have queried the SEC and the industry's self-regulatory organizations (SROs) for clarifications to Reg NMS' uncertainties, only to be answered with further vagaries or, worse, complete silence, industry sources say.
So as the clock ticks, many firms are playing the waiting game. And can you blame them? They fear having to invest substantial resources for Reg NMS compliance, only to find at a later date that their interpretation of the rules was incorrect. This could force a Reg NMS implementation "do over," something that is OK on the playground, but is costly for IT shops.
With Reg NMS, getting it done right is infinitely more important than getting it done quickly. Already, as WS&T Editor-at-Large Ivy Schmerken reported in our blog, the New York Stock Exchange and the American Stock Exchange have missed the Jan. 31 deadline for implementing the sub-penny pricing rule because the exchanges' legacy systems could not handle the quoting and intermarket reports. The SEC granted both exchanges more time to comply.
To get it done right, extensive testing needs to be done. And, again, time is running out, considering that industry observers estimate that it will take at least two full months once all industry participants have their systems ready to perform a comprehensive test.
So where does that leave the industry? From what I hear, most firms are pressing forward in the dark with their Reg NMS upgrades and systems changes, hoping they are doing the right thing. As the Reg NMS deadline approaches, most firms are planning to be ready for the June 29 date. However, many probably are secretly wishing for a Reg NMS implementation extensionnot just so they can further test and ready their own systems, but so the industry can collectively "get it right." Do you think industrywide Reg NMS implementation will meet the deadline? Write to me at [email protected]. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio