NYSE's Niederauer Expects More Firms to Face Expanded Market-Maker Rules

NYSE Euronext Chief Executive Officer Duncan Niederauer said regulators will probably respond to the May 6 stock-market crash by extending obligations to buy and sell shares to more traders.

Niederauer, speaking in Washington today, said too many traders reap the benefits of making markets without responsibilities to keep providing liquidity when stocks are plunging. New rules may be in place as soon as January, he said.

Securities and Exchange Commission Chairman Mary Schapiro called on the agency in September to examine whether the loss of “old specialist obligations” has hurt investors after measures such as trading stocks in penny increments cut the number of market makers. With the facilitation of trading now dominated by hundreds of automated firms with few rules for when they must buy and sell, the SEC is considering ways to keep the biggest from abandoning the market at the first sign of trouble.

The May 6 rout, in which equities temporarily lost $862 billion of value, showed “the U.S. market structure was a lot more vulnerable than we thought,” Niederauer said today at the conference sponsored by the National Association of Corporate Directors.

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.