Opening Statements of Committee Members

Opening Statement of Senator Christopher J. Dodd (D-CT)

Hearing on "The Changing Face of Capital Markets
and the Impact of ECN's"
10:00 a.m., Wednesday, October 27, 1999

I would like to welcome Arthur Levitt, Chairman of the SEC; Matthew Andresen, President, Island ECN; Jerry Putnam, CEO, Archipelago ECN; Kevin Foley, President, Tradebook ECN ; and Doug Atkin, President, Instinet ECN before the Committee today.

Before we proceed with the subject matter of this hearing, I would like to thank Arthur Levitt for his contribution to financial services modernization. We will shortly produce a historic conference report, S.900, which I believe will receive strong bipartisan support in both the House and Senate and will be signed in to law by the President. Throughout this process, Arthur Levitt has been at the forefront of ensuring that investors continue to be protected in this brave new world of financial services. Arthur, Thank you for the vital contribution you have made.

With less than 100 days to the 21st century, and coupled with our nation's transition from an industrial economy to an information economy, our financial markets are also experiencing tremendous change. We are constantly confronted with the fact that we now live in a global marketplace. Decisions made at home must reflect an understanding of conditions abroad.

SEC Chairman Levitt has spoken at length on the subject of the changing landscape of our financial markets. I believe that many of the questions raised by Chairman Levitt are important- and should be appropriately addressed. I also believe that before any action is conceived, careful thought and planning be given to the potential consequences to the issues raised.

I am immensely proud of our nation's financial markets. In evaluating the emerging role of ECNs, Electronic Communication Networks, we must ensure that the integrity of our markets is enhanced, not diminished.

I would also raise concerns that while we struggle here in the United States to adapt to the changes brought about by technology, the global equities markets are also attempting to increase their competitiveness. The issue before us today is not which U.S. exchange or alternative system will prevail in the U.S., but whether the U.S. will maintain its leadership position in the global markets.

I remain concerned over the adaptation of a regulatory scheme that continues to protect U.S. investors. As the number of individuals who invest in our equities markets increases, we must insure that the protections afforded them, keep pace with the changes in the marketplace. With the increasing role of ECNs, we need to take a close look at the potential conflicts that may arise for-profit companies that act as exchanges or fulfill the same role as exchanges.

Regulatory changes must promote the ability of our domestic markets to compete globally. We must recognize that in order sustain our leadership position, we must allow our markets to adapt to the changes brought on by technology and innovation.

We must sustain confidence in our financial markets. We have the best markets in the world because investors believe- and rightfully so- that fairness is the cornerstone of our financial markets. I am especially interested to hear from the representatives of the ECNs as to how they hope to maintain the high level of confidence in our markets.

Again, I welcome Mr. Levitt and the rest of the witnesses to the Committee today, and I look forward to our testimony today regarding your visions of the future of our markets, especially the potential role of ECNs.