• Sep
  • 22
  • 2006
  • 5:38 AM

Q&A: When exactly will restrictions on Direct+ be lifted?

By: Ray Pellecchia
File Under: NYSE, NYSE

A reader writes:

The latest key features of Hybrid Phase III states:

"The current NYSE Direct+® size and time restrictions will be removed, allowing for automatic executions of up to 1 million shares that may be submitted as frequently as desired."

The rollout schedule states that Hybrid will be rolled out on a stock by stock basis.

Does this imply that the time restrictions (30 sec rule) are only removed as stocks are moved into the Hybrid?
Or are they are they removed when Phase III begins, or is complete?

Thanks in advance.

Eric Gottesman
Jefferies Execution Services

Eric -- The restrictions are lifted for each stock as that individual stock is added to Phase III. So if XYZ joins Phase III on Monday, beginning that day you can auto-ex XYZ as frequently as you like, and auto-ex XYZ up to 1 million shares. The restrictions stay in place for other stocks, until they are added to Phase III.

This approach gives everyone an opportunity to gain experience with the Hybrid Market in one stock, then another, etc. until the implementation rolls out to small groups of stocks at a time and then large groups. Of course, when a group of stocks is activated on a particular day, the restrictions will change on all those stocks that day.

Hope that clears it up. Thanks for writing.

BTW, Eric is referring to the training chapter cited in yesterday's post, People get ready. Still can't get that tune out of my head. But as tunes go, not a bad one at all to have turning again and again on the mental repeat.

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Comments

Eric,

There are no Direct+ maximum size and time restrictions for ETFs on the NYSE. This changed last September.
-- Tom - NYSE ETFs & Indexes

by Tom Haines on September 22, 2006 8:03 AM

I had a question regarding sweeps in the hybrid and how they may be charged. For example an ARCA is on the offer at .60 and the NYS is at .59. I send a limit order thru DOT to sweep up to .65. Will the order take all ITS participants up to .65 or just those residing on the specialist's book? From what I am hearing is it will take the best price available including orders not on the book.

This will lead to my next question about rebates. How will this play out ? Will the order thru DOT pay the $3.00 or the standard .25 per 1000? Will the ARCA provider get the $2.00 per 1000 ?

I am a little unclear on how this will work when you have different fee schedueles and market centers that interact with the same market.... please clarify.

Thanks,

David


NYSE Arca NYSE - Listed (Tape A) Pricing Change
CUSTOMER NOTICE

Date of Notice: September 13, 2006

Subject: NYSE Arca NYSE - Listed (Tape A) Pricing Change

Effective October 1, 2006, NYSE Arca will implement a new fee schedule for NYSE Arca Listed Tape A equities (excluding ETFs):

$0.002 per share credit for orders residing in the NYSE Arca Book that execute against inbound marketable orders

$0.003 per share charge for orders that take liquidity from the NYSE Arca Book

$0.001 per share charge for orders routed outside the NYSE Arca Book

The new fee schedule is pending SEC Approval. For additional information, please contact your NYSE Arca Sales Representative.

by David on September 24, 2006 6:23 AM

David --

NYSE will execute at .59 on NYSE, then route out to the .60 offer on Arca and then continue executing on NYSE unless there is a better market to route to between .60 and your limit price.

The customer will pay the NYSE fee of 2.5 cents per 100. You will not pay the away market fee.

We will charge what it would have cost if you executed the trade here at NYSE. So there is no reason to send your order anywhere else but here!

Thanks for writing, David. And thanks to an ace Hybrid-Building Colleague for help with this answer.

For more about routing fees, see this post.

by Ray Pellecchia on September 30, 2006 8:14 AM

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