When the Internet arrived, it revolutionized commerce by introducing electronic markets and automatic order execution. This resulted in lower fees, more efficient markets and greater information and transparency for investors. As part of the review process, the two SROs are working to make their proposals consistent and to prepare memoranda to inform their members of the proposed changes. In line with these efforts, the Commission has been sensitive to the regulatory challenges of a changing technological environment.
Rather, it is an exchange that operates pursuant to a limited volume exemption from registration as a domestic stock exchange. Currently, the NASD, the Chicago Stock Exchange and the Philadelphia Stock Exchange are fully participating in the OTC-UTP plan, and the Boston Stock Exchange participates on a limited basis. Section 510 (a) of the National Securities Market Improvement Act of 1996 directed the Commission to study and report to Congress on the impact of technological advances on stock markets. Recent technological advances allow for a variety and combination of services, which blurs the distinctions between markets, intermediaries and service providers.
Website technology is very promising compared to the cost of a service center or the costs of printing, mandatory toll-free telephone numbers, staff phones, processing and mailing. It can be argued that technology almost always pushes us one step forward, however, if not mitigated and controlled, it is capable of causing enormous damage. An exchange, the Cincinnati Stock Exchange (CSE), has replaced its trading room with a fully automated trading system. The Securities and Exchange Commission is primarily responsible for the administration and enforcement of federal securities laws.
In light of these limitations, the Commission believed that regulating alternative trading systems such as stock exchanges would hinder the development of such systems. Until new technologies are united around uniform rules, and until consumers and investors generally accept new technologies as safe and efficient ways of doing business, the potential benefits will not be fully exploited. The Commission has worked to facilitate the use of technologies that help advisors to provide a better service to their clients, while maintaining investor protection. Technology has proven to be an invaluable ally for Wall Street, but in a matter of hours it could have been the cause of the ruin.
Civil sanctions provisions are codified in several sections of the statutes administered by the Commission, including Section 21 (d) (of the Stock Exchange Act, 15 U. Any possible changes to maximize the benefits of new technology must take into account the primary mandate of securities laws, the protection of investors).
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