Ray, How do you think the Hybrid will affect program trading on the NYSE? Since Jan. 27th 2001 when the stocks started trading in pennies there has been a dramatic increase in program trading. I think currently it averages around 1.1billion shares a day on the Big Board. Thanks again. -- Tony Dey

Tony – We believe that the Hybrid Market will increase the total amount of trading volume, as we offer customers more choices to access liquidity. And we believe that the portion of that volume transacted via the NYSE Direct+® automatic-execution service will also increase, as we eliminate the restrictions on that service and provide members with new tools for automated trading. In addition, program trading has been growing over a period of years, as you point out.

But beyond that, it’s impossible to predict the impact of Hybrid on program trading specifically. Program trading is driven by specific trading strategies, and we can’t hazard a guess as to how Hybrid will impact those strategies, if at all. Too granular, and too many variables.

BTW, we believe that the most accurate measure of program trading indicates that the average daily program share volume is closer to 500 million than 1 billion. Our weekly news release on program trading offers different ways to measure program volume; the way that’s cited first effectively double-counts programs. The most accurate measure – and the measure that’s consistent with how we calculate overall trading volume -- is to examine program purchases plus sales as a percentage of twice total volume. -- RP

by tony dey on February 17, 2006 10:39 AM