July 21, 2000

The Honorable Arthur Levitt, Jr.
Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Chairman Levitt:

Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934, the National Association of Securities Dealers, Inc. (NASD), through its wholly-owned subsidiary The Nasdaq Stock Market, Inc., has filed a proposed rule change to enhance the Nasdaq quotation montage by creating a new venue for the display of trading interests, known as the Nasdaq Order Display Facility (or SuperMontage). Specifically, Nasdaq is proposing to add a new display facility that will show the best bid/best offer, in Nasdaq and two price levels away, accompanied by the aggregate size of the displayed trading interest at each price level. An order routing vehicle within SuperMontage will look to see who has the best quote and send the customer order to them. Without taking any position on the merits of the proposed rule change, I note that the NASD has shown foresight in developing this new model to address the changing dynamics of today’s market environment. While competition among all types of market centers has yielded many benefits, one adverse effect has been fragmentation that has lessened transparency and impeded price discovery, investor protection issues that you have addressed in recent speeches and that the Commission has focused attention on in its SRO inspection program and its request for comments on issues related to market fragmentation (Release No. 34-42450, Feb. 23, 2000).

I am aware of the various correspondence both pro and con that the SEC has received regarding the NASD’s proposed rule change. I also understand that the SuperMontage proposal raises issues that are linked to your agency’s overview of current market structure and how best to maintain fair competition between markets and best execution for investors. These matters are very complex, I know. However, I urge the Commission to diligently address these important and pressing issues in a manner that is consistent with the public interest, so that all parties have the ability to proceed with their plans, pursuant to a final order or whatever action the Commission deems appropriate.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER