2 questions for you:

(1) Am I correct in saying that the shift to the Hybrid market has no direct bearing on a timetable for NYSE and ARCA to merge their books in a way similar to how Nasdaq has been doing with INET and BRUT? In other words for the time being, ARCA is treated as just another market center by the NYSE in terms of order routing?

(2) Can "Reg NMS" IOC orders ever get routed out, or are they treated like ISO orders? Is there an order type that just removes liquidity as quickly as possible from the NYSE book (without routing out) and then immediately returns unexecuted shares?

Thanks -- the blog is great!

Tom

by Tom on January 2, 2007 2:12 PM

Tom --

1) Yes, for purposes of order routing, NYSE treats NYSE Arca as it does any of the other markets that compete with us to post best prices and attract orders. Additionally, I'm not aware of any plans to merge the order books of the two markets.

2) Neither Reg. NMS Immediate-or-Cancel orders nor Intermarket Sweep Orders ever route out to other markets. Both cancel unexecuted shares, and both will be available as Phase IV is rolled out later this month.

You're probably aware of the main difference between ISOs and Reg. NMS IOC, but I'll mention it just in case:
-- ISO orders will execute on NYSE, even if there's a better price in another market; by sending it, you're indicating that you're fulfilling your Reg. NMS obligations by simultaneously reaching out to the other market(s) with better prices.
-- NYSE will cancel Reg. NMS IOC orders if there's a better price in another market.

Good questions, Tom. Hope that answers them. Thanks for writing!

by Ray Pellecchia on January 4, 2007 5:47 AM