SEC may call for establishing a single body to oversee intermarket trading.
In a speech scheduled for delivery Thursday night at Columbia University School of Law in New York, Mr. Levitt said he found "intriguing" the idea of a single body for regulation of transactions involving more than one of the organized stock-trading channels.
The new body would oversee "member regulation, sales practices, and all other aspects of intermarket trading," Mr. Levitt said. But each market would still be responsible for its own "regulatory and surveillance function."
The remarks came as the New York Stock Exchange and the National Association of Securities Dealers Inc. are considering becoming for-profit enterprises and electronic trading networks have added volume to already busy markets.
The SEC is exploring ways to police the markets but is not wedded to a particular model, Mr. Levitt said in his speech.
"Any restructuring, however, must ensure that the self-regulatory obligation be vigorously fulfilled, adequately funded, and dedicated to serving the public interest," he said.
The SEC has "no intention" of impeding the push by electronic trading networks, Nasdaq, and the New York Stock Exchange to attain for-profit status, he added.
The prospect of a unified self-regulatory body received mixed reactions from bank brokerage chiefs.
"Clearly there should be one centralized regulatory guideline in terms of what's appropriate for conduct in the business," said Richard W. Smiley, president of the brokerage arm of San Francisco-based Unionbancal, which is mostly owned by Bank of Tokyo-Mitsubishi..
Neil M. Fried of New Jersey's Valley National Bank agreed. "There are so many regulators looking at so many little segments of the business, complained Mr. Fried, who is investment sales product manager in the bank's Wayne office. Valley uses Invest Financial Corp. of Tampa as its broker-dealer.
Gene C. Levengood, the president of brokerage at National Penn Bancshares of Boyertown, Pa., suggested a cautious approach. He said there should be a "pilot program" before any serious changes are made.
Mr. Levitt also said that the SEC would address an "imbalance" that exists because electronic trading networks are allowed to charge fees for access to their quotes while Nasdaq market makers, who match buyers and sellers, are not.
He further recommended eliminating New York Stock Exchange Rule 390, which prohibits members from trading NYSE-listed securities on the over-the-counter market.
