When we go 'fast'

By: Ray Pellecchia

File Under: NYSE, NYSE

• 0 Comments
• Email Entry

Photo: Bob Watson, indianapolismotorspeedway.com

A reader on the NYSE trading floor writes:

On certain situations I do notice from time to time that 100-share orders from Midwest Stock Exchange or Boston Exchange lock the market and do not print in high-volume situations. Furthermore, this prevents ECNs from crossing over the obstructing order. In terms of the Hybrid Market, why are these inactive orders permitted to exist?

I trade over 1 million shares a day of stock such as Motorola and AT&T and these types of situations are clearly obstructive and interfere with NYSE hybrid Market transactions.

Are Midwest and other exchange specialists bound by the rules of the NYSE's Hybrid program?

-- Shaun

Shaun -- When the NYSE quote is locked or crossed with the quote on the Intermarket Trading System, NYSE Direct+ is not available for automated execution. That will no longer be the case when the NYSE goes "fast" in Phase III this fall; automatic execution will still be available on the NYSE if the NYSE quote is locked by another market. When an incoming NYSE order would lock another market if quoted, that order will be auto-routed to avoid locking. Further, the NYSE will auto-route to all better prices at the top of book in other markets. This will include 100-share quotes, which are in fact firm quotes. (Currently, one is permitted to trade through a 100-share quote, but one is not obliged to ignore it.)

Only NYSE members are bound by Hybrid Market rules, but all participants in the other markets are bound by the ITS rules. NYSE staff has reported the locked-quote problem in MOT and T to other ITS markets.

A tip of the HybridTalk visor (the sun was kinda intense these last few days!) to a couple of Hybrid-Building Colleagues for help with this information.

Speaking of fast, did you see how close Marco Andretti came to winning the Indy 500 in the NYSE Group car last weekend? Missed it by .0635 of a second. These days I watch for things that happen in less than a second, now that a Direct+ order gets done in about a third of a second. You'll get 'em next time, Marco. And if Marco had to come in second, glad to see it was a listed company that edged him out -- winner Sam Hornish, Jr. drives for Penske Racing, which is a unit of Penske Corp., which is an affiliate partner of United Auto Group, Inc. (NYSE: UAG). Sorry, you know I can never resist plugging our listed issuers.