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WASHINGTON – Several Wisconsin credit unions and the Consumer Federation of America are speaking out on a SEC proposal that would enhance the regulatory structure of the U.S. equity markets. The proposed Regulation National Market System (NMS) would incorporate the following: a uniform rule for all NMS market centers that, subject to certain exceptions, would require a market center to establish, maintain, and enforce policies and procedures reasonably designed to prevent “trade-throughs” – the execution of an order in its market at a price that is inferior to a price displayed in another market; a market access rule that would modernize the terms of access to quotations and execution of orders in the NMS; prohibit market participants from accepting, ranking, or displaying orders, quotes, or indications of interest in a pricing increment finer than a penny, except for securities with a share price of below $1.00; and amendments to the rules and joint industry plans for disseminating market information to the public. In a May 19, 2004 letter to SEC Secretary Jonathan Katz, Sarah Robertson, president/CEO of $18 million Miller Electric Credit Union in Appleton, Wis. wrote in support of the reforms saying “members will benefit from the proposed regulatory reform of the `opt-out’ provision that would modify the outdated `trade through’ rule giving investors more choices in their investment decisions.” “Investors in stocks and mutual funds will benefit by being able to decide how their order is executed and which factors should be considered in that execution,” Robertson wrote. Thomas Maday, president/CEO of $169 million Marine Credit Union in Fond Du Lac, Wis. wrote the proposed regulation “would allow informed investors to choose to opt out of being forced to have their orders sent to a market that may have the best advertised price when investors believe chasing this price, which may not be available, is not in their best interests.” Dean Wilson, president/CEO of $30 million Wauwatosa Credit Union in Menmonee Falls, Wis., supports the opt-out provision. “I believe that investors should have the power to determine how their order is executed and which factors should be considered in that execution,” Wilson wrote in his May 21 letter. “The SEC can encourage the financial markets to provide flexibility and choice to investors by allowing investors the ability to opt-out of the rigid definitions of the trade through rule.” The CFA also supports the SEC’s trade-through rule proposal, but it “strongly oppose(s) the proposed opt-out exception, which takes away with one hand what the Commission has given with the other.” “Allowing an opt-out would enable those who wish to ignore the trade-through rule to do so, and would extend that ability to the market in listed securities where it has previously not existed,” wrote Barbara Roper, CFA director of investor protection. Roper also said “given the variety of business models that exist among market centers, we believe it would be difficult, if not impossible, to come up with one set of rules for preventing trade-throughs that would be equally appropriate for all market centers. We support the Commission’s proposed approach of allowing individual market centers to decide for themselves how best to achieve the goal of preventing trade-throughs. With this flexibility comes the potential for abuse, however, in the form of inadequate and ineffective policies.” To counter abuse, the CFA proposed requiring quoting market centers to make available, and provide access to, their entire depth of book or requiring display and access to all bids and offers within a certain pricing increment of the best bid and offer or up to a certain volume of shares. [email protected]

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