The Securities and Exchange Commission has approved Nasdaq's new SuperMontage trading system - but may delay the opening of the new facility until 11 October depending on feedback received from rival electronic communications networks (ECN).
To establish start of trading in the new system, the Commission has ordered ECNs to certify under oath that they are actively preparing to use the Alternative Display Facility (ADF) developed by the National Association of Securities Dealers (NASD) as an alternative to SuperMontage. ECNs, which have claimed they need more time to hook up the ADF, have been given five days to respond to the regulator. If no responses are received, SuperMontage will formally open for business on 6 September.
The proposal to establish SuperMontage was originally filed on 1 October, 1999 and was amended nine times to reflect the concerns of market participants. The system, which adds a limit order book that is electronically displayed and executed through automatic execution, was designed to enable Nasdaq to compete more effectively with ECNs and other market participants.
Rival networks, which match buyers and sellers of stock electronically, fought for the development of an alternative display facility, or ADF, as an alternative to SuperMontage.
The SEC's call for objectors to certify their intention to post the majority of their business over the ADF is intended to keep competitors from unnecessarily delaying the introduction of the new Nasdaq system.
Analysts estimate that a one month delay to the launch of SuperMontage will cost the Nasdaq roughly $500,000 in interest on its $100 million investment in the system.