WSJ: Change coming to NYSE

By: Ray Pellecchia

File Under: NYSE

• 0 Comments
• Email Entry

In Monday's Wall Street Journal, Big Board Sets Expansion In Electronic Trading.

The lede sentence alone sums up what we've been talking about for some time in this space: "Change is coming to the New York Stock Exchange."

Excerpt:

At issue this fall is the NYSE's "hybrid market," billed as a marriage of the Big Board's traditional auction marketplace with an improved electronic-trading system. Opinions on the project remain split. Some critics deride it as too complicated and say it may not go far enough, but it has the support of Chief Executive John Thain, who arrived from Goldman Sachs in 2004.

The first two of the program's four phases already are in place. The key expansion in which the volume limits will be removed will start in earnest in October.

The idea, said NYSE Senior Vice President Lou Pastina, is to give investors greater access and choice, for example by improving the NYSE's speed of trading. Mr. Pastina said the hybrid market should help the NYSE's specialists, auctioneers who manage the trading in assigned stocks, and its floor brokers, who represent customers' stock orders, by giving them better tools. Volume also is expected to increase.

Over the years, the specialists have sometimes been criticized as anachronistic. But Michael Pagano, an associate professor of finance at Villanova University outside Philadelphia, doesn't think they're necessarily doomed. Specialists are "never going to be as fast as an electronic system, but what they can do is provide intellectual and financial capital," he said. "No computer has money of its own."