DEALERS PROPOSE `NEXT NASDAQ'.

Byline: Marcy Gordon Associated Press

A securities dealers group is proposing a new trading system that it says would improve investors' chances of getting a better buy or sell price for stocks on the Nasdaq Stock Market.

Not all brokerage firms like the plan, which could diminish the role of powerful market-makers in Nasdaq stocks.

The National Association of Securities Dealers, which operates the Nasdaq market, has dubbed the proposal ``Next Nasdaq.'' The group submitted it for approval to the Securities and Exchange Commission on Monday.

The proposed system ``responds to the demands of investors and (dealers) for a marketplace that provides for fast and efficient access to the best prices,'' the NASD said in its filing to the market watchdog agency.

``The basic intent . . . is to provide increased price transparency,'' NASD spokesman Reid Walker said Tuesday.

He said the system also would give mutual funds direct electronic access to trading on Nasdaq provided they were sponsored by a brokerage firm.

A major feature of the system is a new central ``file'' containing orders to buy or sell Nasdaq stock at a specific price. The file, which could be seen by both investors and traders, would provide a neutral, cost-effective way to find a match for their orders, the NASD said.

When the prices of a buy order and a sell order for a stock matched in the file, the trades would be executed automatically, without involving a brokerage firm that is a market-maker in the stock.

The electronic Nasdaq, the nation's second-largest stock market and home to fast-growing computer and technology companies, is a dealer market. Investors usually buy stock from or sell it to a market-maker in the stock, rather than another investor.

The brokerage firms that are Nasdaq dealers have come under scrutiny for their treatment of investors.

The SEC and the Justice Department last year charged that major Nasdaq dealers harassed or refused to trade with others who tried to offer investors a better price for a stock. Other times, the powerful dealers colluded in what amounted to a form of price-fixing and delayed reporting major trades when it could hurt their stock holdings, the federal authorities said.

About 30 brokerages, including many Wall Street giants, are negotiating a $900 million settlement with investors in a class-action lawsuit alleging the firms rigged prices on Nasdaq to inflate their profits. It would be the biggest civil antitrust settlement ever, legal experts say.

As a result of its investigation, the SEC ordered Nasdaq and the dealers to adopt new ways of handling stock orders that, along with other changes, have reduced market-makers' profits.

SEC spokesman Christopher Ullman said the agency needed to review the new Nasdaq trading proposal before it could comment.