The big mergers planned by the New York Stock Exchange and the Nasdaq Stock Market will give them dominance in stock trading but probably will not hurt competition, the government's top securities regulator said Thursday.
William H. Donaldson, Securities and Exchange Commission chairman, testified before a Senate committee amid concern about the potential effect of the market-shaping mergers on competition and investors.
As the NYSE plans to merge with all-electronic rival Archipelago Holdings Inc. and Nasdaq finalizes its $934.5-million purchase of Instinet Group's electronic trading network, Donaldson said the mergers would combine with a sweeping new trading rule, narrowly approved by the SEC last month, to create a more competitive marketplace that should benefit investors.
"I believe the effect of the proposed consolidations, combined with the new trade-through rule, should be to increase market depth and liquidity and enhance order competition," Donaldson told the Senate Banking Committee. "Moreover, I do not agree, as some may fear, that the consolidations represent the death-knell for competition among markets."