The latest draft of Regulation NMS, the Securities and Exchange Commission’s proposal for market structure reform, is now out for comment, and the commission has promised action soon after the comment period closes. The regulation, by extending the so-called trade-through rule to Nasdaq and covering all orders that are accessible...

At an AEI conference last June, Professor Kenneth M. Lehn and his colleagues presented a ground-breaking paper that compared the effect of market stress—when the markets receive new positive or negative information—on the bid-ask spreads in the NYSE, NASDAQ, and the electronic communications networks (ECNs). The June paper indicated that...