that sort of thing where they do some regulatory work, and we have some numbers of how much that allocates. I don't know those offhand, but direct regulation is just about half of the NASD's budget. Mr. DOUGLAS. Do you have the same kind of monitoring on line as they do with their Stock Watch? I mean, are there people on screens all the time watching rumor tapes, things like that? Mr. PINTO. I think we all think ours is better than the other, but I think when you look, if you came to our market surveillance department and walked through, I think you would find state-of-theart technology, no less than any other, the New York Stock Exchange or the American Stock Exchange. We have a Stock Watch department which is there dealing with second-to-second activity in the marketplace, we have highly sophisticated computer systems, work stations that give analysts the ability to call information from a variety of sources on a screen. We have a group of analysts that conduct investigations of situations that warrant review, so I think you would find that our market surveillance department is certainly no less than as complete and sophisticated as the New York and the American Exchange. [The material referred to follows:] I appreciated the opportunity to testify before the Subcommittee on Commerce, Consumer and Monetary Affairs on the subject of short selling. Enclosed is the information about the Exchange's regulatory budget and staffing levels, as requested for the hearing record. Please let me know if I may be of any further assistance or provide any additional information to the Subcommittee. Sincerely, Enclosure (a) 1986 Division totals are pro forma, compared to subsequent years, reflecting divisional reorganizations (b) Automation development functions were placed in a separate division (Reg. Technology) beginning in 1988 (c) 1989 full year projection (with Business Line Allocations) 12/07/89 In 1989 the American Stock Exchange Market Surveillance Division employed 116 people. The Market Surveillance budget was $16-million. These figures include options and equity surveillance. The entire regulatory budget was $29-million in 1989. AMEX As a follow-up to our discussion yesterday and in conjunction with our testimony before the Subcommittee Hearing on short sales, the total NASD budget for FY 1990 is $111 million. The budget for the Compliance Divison which is exclusively regulatory and enforcement represents 56% of the NASD budget or a little over $62 million. When considering the regulatory aspects of other divisions within the NASD, the overall total budget for regulation and enforcement represents about $90 million per year or 81% of the NASD budget. Please let me know if you need any additional information. Sincerely, John E. Pinto Executive Vice President |