NYSE’s Thain Defends Trade-Through Rule, SEC Ruling Expected Soon

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As the speed versus price debate continues within the Securities and Exchange Commission, the New York Stock Exchange's new chief executive John Thain has spoken out in support of the specialist system and current practices that put price before speed.

The SEC could rule as soon as this week about whether or not to change the trade-through rule, which requires securities traders to find investors the best price even if it is available on a competing exchange. Critics of the rule say that it gives the Big Board an unfair advantage since is shields market makers—also known as specialists—from the quicker trades offered by automated platforms, Reuters reported, adding that institutional investors are among those who most often favor the automated trading platforms.

Thain also defended the trade-through rule last week at congressional hearings on the issue. Those opposed to the rule say it doesn't take into consideration those traders, such as institutions and short-term traders, for whom speed trumps price when making transactions.

The NYSE is considering several changes to its platform to improve its electronic trading options and to enhance the speed of trading, but Thain still defends the trade-through rule.

"Once you have equally fast markets, investors should go to where they get the best price," said Thain. The trade-through rule "has allowed U.S. markets to be successful as they have been," he said.

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