|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Tuesday, September 28, 1999||202-224-0894|
FUTURE HEARINGS TO FOCUS ON ECNs, SEC RESPONSE
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, convened a full committee hearing today on plans by the New York Stock Exchange and Nasdaq to become publicly traded companies.
"This is the first hearing that we have had that is beginning to focus on the revolution that is occurring in the equity markets of America," Gramm said, adding that the committee will schedule further hearings on electronic communications networks (ECNs) and the response of the Securities and Exchange Commission to changes in the equity markets.
In his opening statement, Gramm said:
"We are meeting today to look at public ownership of U.S. stock markets.
"When I think about the American economy, when I think about its fundamental strength, I always think about its equity markets. So when we're talking about things that are going to fundamentally alter the equity markets of America, we're talking about things that are important to every person who works or lives in America.
"Our capital markets are the best markets in the world. We want to keep it that way. It is clear that the information age, which we're only on the edge of, is going to dramatically alter the way we sell equities in America.
"The value of equities is primarily related to knowledge, and when people can have massive amounts of knowledge at almost zero cost, it's bound to have a profound impact on the equity markets of America and the world.
"We're beginning to see manifestations of that in this demutualization effort by our two major stock markets.
"My own opinion is that these marketplaces have every right to decide to structure themselves, from a corporate structure point of view, as they see to be beneficial to them.
"I believe that this is a decision that ultimately needs to be made by people who are in decision-making positions in these two markets. I believe the Securities and Exchange Commission should approve these requests.
"My basic view is that we are going to undergo in the coming weeks and months and years a dramatic change in the American equity markets. I don't think that anybody is wise enough to figure out exactly what this new market is going to look like.
"I think there will be a natural tendency for some to say that the federal government, through regulatory power, should set parameters for this new market to evolve in. I take a very different view.
"I think our first objective should be the economic equivalent of the Hippocratic oath, that is, first, do no harm.
"I think it is important to allow technology to run its course. New technology and dramatic change represent a wave of creative destruction. I think new technology will create and destroy vast fortunes. But I think the net result will be a dramatic improvement in the efficiency of the American economy, and when the American economy can generate capital more efficiently, then everybody in America – at least in the aggregate – is a winner.
"So I think our goal should be to allow technology to evolve, to respond when specific problems occur, but I think the basic approach has got to be to allow technology to transform the market, and then adjust the regulatory process to it.
"Finally let me say that there's nothing in the proposal that these two exchanges are looking at that would in anyway undo the regulatory structure of the Securities and Exchange Commission. No power the SEC has would in any way be diminished, and it seems to me that while we have a review process, while the SEC approval is required, that this is something that should happen."