Q&A: Where's the J?

By: Ray Pellecchia

File Under: NYSE, NYSE

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A trader writes:

Two quick questions for you:

Are there no more J prints in the hybrid system? I saw the 1 mil share print in [issue symbol deleted] but it wasn't accompanied by a J.

The hybrid has a goal of 5-10 seconds after going slow to going back to fast. How do you see liquidity providers being able to step up if they don't already have standing orders on the book? I've seen several times that the specialist locks his book within a second of going U - hence locking all liquidity providers and providing an inferior print to the other side.

-- Jon

Jon --

When a Liquidity Replenishment Point is reached, and the market is not locked or crossed, the system prohibits automatic execution for 10 seconds (or fewer if the specialist resumes auto-quoting). In this situation, there is not a need for contra-side interest; the LRP is a time out because the market moved too far, too fast. In a case where there is a resulting lock or cross with an LRP, there is no automated time frame. The goal is to discover the correct price and to solicit as much contra-side interest as possible.

Usually, it is not the specialist who locks the book, the lock is a result of the order causing the LRP, or new customer orders. Also, a locked market doesn't shut out all liquidity providers; they can still send orders via DOT that would be included in any subsequent "manual" trade.

The J indicator signals a Rule 127 "auction style" block trade outside the prevailing best quote, and is still in use. Not every large block, however, is a Rule 127 trade.

I hope that gets at what you were asking, Jon. Thanks for writing, and thanks to my Hybrid-Building Colleagues for their help puzzling this out.

Tags: New York Stock Exchange, Hybrid Market, NYSE, NYSE Group, NYX, trading, stock market