Reg NMS gives priority to fast markets that display automatically executable quotes and provides market centers with the ability to ignore manual quotes. It also will mandate either top-of-book or depth-of-book order routing.

Are you for or against the proposed trade-through rule, and are you for or against depth of book?

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From a fairness perspective, Reg NMS is a winner. By limiting trade-through protection to automated, immediately accessible quotes, any unfair advantage that the NYSE might have over electronic markets will be eradicated. The ECNs and many institutions were justified in demanding the elimination of the specialists' "free option" and will be pleased with the results. However, their "if it ain't broke, don't fix it" refrain will fall on deaf ears with respect to extending the trade-through rule to Nasdaq. The SEC will likely choose to be even-handed, recognizing that uniform application of regulations is the only fair way to go.That said, adopting the depth-of-book (DOB) alternative would be disastrous on numerous levels.

First, it completely ignores the reality of why institutions trade the way they do. Most liquidity is deliberately not exposed for fear of front running and disappearing contra-side liquidity. Institutions provide liquidity by reacting to trading opportunities, which by their nature are dynamic and difficult to predict. Without changing these fundamental realities, depth of book will not change the way institutions trade.

With much liquidity still hidden, sweep pricing will be inaccurate and misleading and will not reflect a true balance of supply and demand.

Second, DOB risks potentially dangerous unintended consequences. Increased internalization justified by DOB visible price points is likely, as is further fragmentation, with institutions choosing to use crossing networks, foreign markets and upstairs desks more frequently rather than exposing their orders.

Lastly, DOB will form a virtual CLOB (DOB and CLOB rhyme for a reason!). This would greatly reduce the intermarket competition that has made our capital markets the envy of the world and squash innovation, with its first victim being the new NYSE hybrid.

DICK ROSENBLATT, President and CEO of Rosenblatt Securities, trades on the floor of the New York Stock Exchange.

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Reg NMS is an ambitious effort on the part of the Securities and Exchange Commission to improve the structure of the equity markets. It is my view that a phased approach to regulation is most likely to achieve this goal.

The first step is to encourage the SEC to mandate that markets efficiently connect to one another. This can be accomplished in a couple of different ways, one of which is through a central network (similar to ITS); another is through a series of private linkages. The end result must be accessible quotations, defined by the SEC as "fast markets."

Once this is achieved, the SEC should then examine the need for a trade-through rule. In an efficiently connected market, there should be little or no need to trade through another market's quotation, thus creating an environment that essentially regulates itself.

However, if there are some unforeseen forces that do not allow free markets to afford customers the necessary protection, then the SEC can address the problem with a trade-through rule. At that point the SEC can make the evaluation of whether or not the markets need to employ national best bid and offer (NBBO), top-of-book or full depth-of-book protection. Either way, the SEC will be able to use a more balanced approach to the application of regulation.

As an aside, in the re-proposed Reg NMS, the SEC condones the use of fast markets for its trade-through evaluation but cautions participants against using only fast markets for best-execution purposes.

This double standard will pose significant burdens to executing venues if every time they get to a "slow quotation" they have to stop the process and act on the quote, which is defined as not automatically accessible. The most efficient way of measuring best execution is through the use of 11AC1-5 data and not a quotation that may be comprised of both fast and slow quotes.

MARK MADOFF is head of listed trading at Bernard L. Madoff Investment Securities.