Opening Statements of Committee Members

Opening Statement of Senator Chuck Hagel (R-NE)

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

Good morning and welcome to our witnesses. US and global capital markets are innovating at amazing rates. The exchanges and their competitors are forced to react rapidly to changes in the marketplace and advances in technology. This innovation has spurred competition, both domestic and international.

The United States has the deepest and most liquid markets in the world. Firms of all sizes have discovered that their ability to raise capital on the exchanges has improved in recent years. These firms are no longer dependent on bank or venture capital financing. It is important to recognize this fact because the actions of Congress, the SEC, the exchanges and their competitors will influence the markets in ways that are critical to US firms' access to capital.

The New York Stock Exchange and Nasdaq recently testified before the Senate Banking Committee about their efforts to become for-profit entities. It seems clear that competition from the Electronic Communications Networks (ECNs) is influencing the New York Stock Exchange and Nasdaq in this decision. I have always believed that competition is healthy for all segments of the financial markets. The greater the competition, the greater the efficiency and choices for consumers.

However, as Chairman Levitt said in a recent speech, "these issues present unique challenges and opportunities." Congress and the SEC need to make sure that our equity markets maintain a high level self regulation in order to keep consumer confidence. I am here today to learn about both the challenges and opportunities that ECNs represent to our equity markets. I look forward to hearing from the witnesses. Thank you."