settled with the Nasdaq dealers accused of colluding to maintain wide spreads. While none of the dealer firms had to pay penalties, they agreed to refrain from pressuring any other market maker to maintain wide spreads and from refusing to deal with other traders who try to undercut an existing spread. In addition, the firms agreed to ran- domly monitor phone conversations among dealers to ensure that the terms of the settle- ment are adhered to. In August 1996 the SEC settled with the National Association of Securities Dealers (NASD) as well as with the Nasdaq stock market. The settlement called for NASD to im- prove surveillance of the Nasdaq market and to take steps to prohibit market makers from colluding on spreads. In addition, the SEC mandated the following three rules for Nasdaq dealers:   1. Display publicly all limit orders. Limit orders from all investors that exceed 100 shares must now be displayed. Therefore, the quoted bid or asked price for a stock must now be the best price quoted by any investor, not simply the best dealer quote. This shrinks the effective spread on the stock and also avoids trading through. 2. Make public best dealer quotes. Nasdaq dealers must now disclose whether they have posted better quotes in private trading systems or ECNs such as Instinet than they are quoting in the Nasdaq market. 3. Reveal the size of best customer limit orders. For example, if a dealer quotes an offer to buy 1,000 shares of stock at a quoted bid price and a customer places a limit-buy order for 500 shares at the same price, the dealer must advertise the bid price as good for l,500 shares.     Market Structure in Other Countries   The structure of security markets varies considerably from one country to another. A full cross-country comparison is far beyond the scope of this text. Therefore, we instead briefly I. Introduction 3. How Securities Are Traded The McGraw−Hill Companies, 2001           82 PART I Introduction     Figure 3.5 Trading volume in major world stock markets, 1999.     12,000   10,000   8,000   6,000