Vanguard Asks for Test Program to Send Stock Orders to Exchanges

Vanguard Group Inc., the world’s largest mutual-fund company, is calling on regulators to conduct a test program of a rule that would force more U.S. stock trades onto public exchanges.

By sending orders away from private venues such as dark pools, the rule, known as trade-at, would help share price discovery and improve investor confidence, Joseph Brennan, principal and head of the global equity index group at Vanguard, said in remarks prepared for a Senate hearing today. About 60 percent of U.S. stock trading takes place on public exchanges.

“Publicly-displayed liquidity is the foundation of a transparent and efficient market,” Brennan said in his statement. “A structure that encourages publicly displayed limit orders reduces spreads, increases liquidity, promotes price discovery, and lowers transaction costs for all investors.”

Brennan is due to speak at a hearing on U.S. stock markets convened by the Permanent Subcommittee on Investigations.

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