In his address, Mr. Nicoll talked about the historical trade-off between competition and fragmentation and asked: "What if we have falsely labored under this trade-off since the creation of the National Market System almost three decades ago? Clearly, if we frame the issues incorrectly, we have no chance of finding the right solution."
In putting forward an alternative approach to solving market structure issues, Mr. Nicoll pointed out that "advances in technology and communication today permit market participants to seamlessly and instantaneously access the prices displayed by all markets, eliminating fragmentation."
From this more accurate definition of fragmentation, Mr. Nicoll said: "I arrive at what may seem, at first, a rather surprising conclusion. The market for NYSE listed securities, where the NYSE controls approximately 80% of the market, is more fragmented than trading in NASDAQ-listed securities where no one platform has more than 20 % of the volume. Why? Because the markets trading Nasdaq-listed securities are much more transparent and accessible than the NYSE."
The full text of the speech is available at: http://www.instinet.com/about/speeches/sia_mkt_str_06_13_03.pdf
