Q&A: How markets interact

By: Ray Pellecchia

File Under: NYSE

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A correspondent who identifies himself as an Italian student writes:

i have a question about Hybrid Nyse and the acquisition of Archipelago: \how interact close prices of specialists with those of electronic auction of ARCA? do they coexist? And which is the behaviour of traders? thanks for your answer.

I wish I paid better attention when my grandmother tried to teach me a bit of Italian, so that you could ask your questions in your native language and I could understand better. I'm not sure that I fully understand what you're asking, but here's my best effort:

New York Stock Exchange and NYSE Arca are two distinct markets owned by NYSE Group. Both markets trade NYSE-listed stocks (several other markets trade NYSE-listed stocks too).

All of the markets that trade NYSE-listed stocks are linked by an Intermarket Trading System as well as systems that consolidate the dissemination of quotes and trades among the various markets. In general, the markets interact through communication with each other. For example, if market A is posting the best price for a stock, and market B receives an order for that stock, market B is supposed to match the better price or send the order to market A.

The closing price of an NYSE-listed stock is commonly considered to be the last price on the NYSE, although other markets (including NYSE Arca) continue to trade NYSE-listed stocks after the NYSE closes at 4 p.m.

I hope that helps, at least a little. Thanks for writing; and please write again if I have misunderstood. And if you don't mind my asking, what are you studying, and where?