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Lack of representation by listing exchanges diminishes authority of SEC market committee, says Nasdaq CEO

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Lack of representation by listing exchanges diminishes authority of SEC market committee, says Nasdaq CEO

CEO Bob Greifeldremains critical of the makeup of the SEC's Equity Market Structure AdvisoryCommittee.

Thecommittee met on April 26 to discuss proposals concerning exchanges, including potentiallycutting access fee cap and corresponding liquidity rebates, clarifying exchangefunctions subject to self-regulatory organization immunity and increasingexchange liability levels.

"Asyou know we think the committee's not formed in the proper way," Greifeldsaid during an April 27 earnings call. "It's a strange and curioussituation where the two listing exchanges are not part of the committee. Ithink that, in some very significant way, diminishes the authority of thecommittee even though it doesn't have an official position."

MarketWatch reported on Oct. 23, 2015, that Nasdaq,Intercontinental ExchangeInc.'s New York Stock Exchange and asked SECChairwoman Mary Jo White to rethink the membership of the committee. Noexecutive at any of those three companies was given a seat, but Chairman Joe Ratterman was chosen to become part of the committee.

TheEMSAC Regulation NMS Subcommittee proposes creating a data pilot program thatwould measure the impact of lower access fees on both market quality andmarketplace behavior. Greifeld said Nasdaq has experimented with , but theprogram should be a coordinated effort by the industry.

Regardingthe proposal to increase the liabilities of exchanges, the CEO said that it isa court issue more than a commission issue. The EMSAC Trading Venues RegulationSubcommittee recommends that self-regulatory organizations that engage inactivities with an increased risk of negative financial exposure onparticipants if mismanaged, such as IPOs or opening and closing auctions,should be required to provide for higher levels of liability for thesefunctions.

Greifeldsaid Nasdaq is reviewing the current proposals, but also pointed out that it isdifficult to predict what will happen in the future because of the upcomingchange of administration both in the White House and at the SEC.

Providingdeal updates, Greifeld said the Department of Justice notified Nasdaq of thecompletion of the Hart-Scott-Rodino review of its pending of He said Nasdaq will now work on getting the SEC's approval forthe deal. The CEO said the deal's closing, which was previously expected tooccur in the second half the year, could happen as early as the end of secondquarter.

Greifeldalso said that the HSR review of Nasdaq's pending acquisition of BoardVantage Inc. has beencompleted. The deal is expected to close in the coming weeks.