The Honorable Phil Gramm
Chairman
Committee on Banking, Housing, and
Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, D.C. 20510

Dear Chairman Gramm:

I am writing in response to your correspondence dated August 17, 2000 requesting that the Securities and Exchange Commission further extend the comment period for the National Association of Securities Dealers’ (NASD) SuperMontage proposal.

As you may know, we have been working on the SuperMontage for almost one year. Nasdaq formally submitted the SuperMontage proposal to the Commission in October of 1999. The proposal, together with certain amendments, was published for comment in December of 1999. The comment period, with extensions, ran until

January 11, 2000. In March of 2000 the Commission published further amendments to the proposal for public comment. To date, we have received a total of 48 comment letters.

Since that time, Nasdaq has further refined the proposal in response to comments from market participants as well as Commission staff. In addition, my staff convened several meetings recently between Nasdaq and the ECNs to ensure that every possible effort was made to accommodate any legitimate objections that the ECNs might have to the proposal. It is fair to say that all market participants have had a substantial opportunity to review and evaluate these proposals. Indeed, the most recent amendments that Nasdaq filed were in direct response to some of the comments made by the ECNs at our meetings. Thus, the ECNs were fully aware of the substance of the amendments that were filed subject to the 15-day comment period.

Given the substantial amount of time that this proposal has been pending, I believe that an extension of 15 days would be sufficient to address your concerns. Extending the comment period for another 15 days would bring the total comment period to one month—more than the standard comment period of 21 days for an SRO proposal.


The Honorable Phil Gramm

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I strongly believe that the vibrancy and dynamism of today’s markets are attributable in important part to the decision of your predecessors to embrace competition

among markets as the defining principle of our national market system. In my judgment, Nasdaq’s present drive to innovate is a reflection of the intensely competitive landscape shaped by the 1975 amendments. Ensuring that competition among market centers—traditional exchanges, ECNs, and dealers alike—remains fierce but fair represents the core of the Commission’s regulatory mandate.

To this end, the Commission is committed to ensuring that those ECNs that wish to register as exchanges and that have the capacity to operate as self-regulatory organizations are approved as rapidly as possible. The Commission also remains committed to registering Nasdaq as an exchange, as well as the contemporaneous spin-off of the regulatory arm of the NASD.

As always, I appreciate your interest in our nation’s securities markets. If you have any questions regarding this matter, please feel free to contact me at (202) 942-0100.



Identical letter sent to Chairman Bliley