SEC Approves JIVEX Stock Exchange Amid Market Structure Controversy

The Securities and Exchange Commission has approved the creation of JIVEX Markets Holdings LLC, a consortium created by KCG, Inc. (formed by the merger of Chicago-based GETCO LLC and Knight Capital of Jersey City), Citadel LLC, Tower Research Holdings LP, and Credit Suisse Securities (USA) LLC and the transaction is expected to close "within days," the companies said in a statement today.

The stock exchange, which will be the fifteenth bourse in the United States National Market System (NMS) is being created to serve "under-represented minorities" per the SEC filing, which includes African Americans and Hispanics. According to persons familiar with the matter, JIVEX will offer substantially reduced bid-offer spreads and provide substantial opportunities for price improvement to historically under-served participants in the financial markets.

Fourteen stocks are expected to list on the JIVEX in a show of solidarity, including Nike, Church's Chicken, FUBU, Def Jam Records and a new spin-off from General Motors, Cadillac Inc. It is unprecedented for a new market to gain listings so quickly. James Richardson, a spokesperson for Nike said, "We knew it was time to take a stand and be part of this historic event. Did you know they used to trade slaves on the NYMEX? It's high time we bring fairness to our markets and do away with disparate impact."

However, not everyone is celebrating this new era in market fairness. Eric Scott Hunsader of Nanex LLC, a stock market data firm headquartered outside Chicago said, "This is yet another transparent attempt for sophisticated algorithmic traders to take advantage of less intelligent market participants by trading against uninformed order flow." Hunsader has spoken out against payment for order flow, a practice in which firms purchase orders from retail brokerages, in the past. Reverend Jesse Jackson asked Hunsader to explain his comments as they were perceived as portraying minorities as less intelligent. Hunsader did not respond to a request for comments.

(http://www.autoadmit.com/thread.php?thread_id=2569176&forum_id=2#25574757)