What's next at NYSE; more on bonds; 'Wall St. in the Black'; ITS; more links

By: Ray Pellecchia

File Under: Bonds, NYSE

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A couple more Stottlemyres and the Yanks could have beat the Cards in '64.

Pondering What's Next: As NYSE transitions to a hybrid model, floor traders and specialists re-evaluate their roles --Louis G. Pastina, who has headed up development of the Hybrid Market since the NYSE first filed with the SEC to initiate the system in February 2004, notes that recent examples suggest that trading floor attributes are still vital. He cites Feb. 27, when the Dow Jones Industrial Average dropped more than 400 points, and many execution systems were overwhelmed by a miscalculation of the Dow.
"On that day, we pointed to the dual nature of the Hybrid, and that it still retains the attributes of a trading floor. Floor brokers were able to trade with other floor brokers and specialists, and we actually traded 2.4 billion shares with almost 70% market share [in listed stocks]," Pastina says. He adds that specific stocks can benefit similarly when unexpected news emerges, such as an earnings surprise or regulatory snag, and extra effort is required from the floor to find willing buyers and sellers.
The NYSE floor functions well in such situations, in part because it has always been the biggest and most liquid dark book, where investors remain anonymous but have flexibility to search out supply and demand. In addition to bolstering investors' courage to step into difficult situations, anonymity minimizes the trade's impact on the stock's price and increases the probability of executing the transaction at a favorable price to the investor. Experienced floor traders grease the process by digesting signals in the crowd of brokers around them to size up supply and demand for a security. Their human interaction - even if it is a bit slower than trading electronically - has enabled extremely large orders or orders of illiquid shares to find a bid or offer.
"The NYSE was always a market where huge amounts of available liquidity resided at all times. Even though it wasn't visible, it enabled investors to find trading partners that would react to opportunities quickly," says Richard Rosenblatt, CEO of Rosenblatt Securities. (Investment Dealers' Digest, April 16, 2007/subscription) [This is a long, thoughtful and balanced piece about the roles of people and automation in the market. If you're not a subscriber, the issue is worth finding. -- RP]

The NYSE Tackles Bond Trading -- John Holman, vice president for fixed income, discusses NYSE Group's big plans to trade bonds electronically. (TheStreet.com video)

Data about Bonds -- With the new platform to launch on April 23, providing a more efficient and transparent way to trade corporate bonds, here's a quick reference of where to find specific data about NYSE Bonds. (NYSE Data)

NYSE Euronext and BLACK ENTERPRISE Magazine Salute the Legacy of African Americans in the Financial Services Industry by Ringing the Closing Bell(SM) on Monday, April 16 at the NYSE; Reception Further Honors African American Contributions on Wall Street April 25 -- Yesterday's closing bell underscored that momentum is building for the important "Wall Street in the Black" documentary project. More and more firms are signing up to support it. If you're on or around the Street and you haven't booked a seat or table for the April 25 dinner, well, what are you waiting for? (PR Newswire)

Today in NYSE History, 1978 -- The Intermarket Trading System (ITS) went into operation. Forgive me, but I didn't bake a cake. ITS is probably second only to specialists as the scapegoat for bad executions. People always complained about ITS technology, but to me that hasn't been the problem with it; the real issues have been the rules and governance surrounding it. Anyway, the much-unloved system turns 29 today and, in this day of Reg. NMS-era linkages, probably won't make it to 30. BTW, market-history buffs should check out the new NYSE Euronext timeline on our site, which goes all the way back to the Dutch East India Co. (1602!) .

"I'd like to have an argument, please." Remember that Monty Python sketch? Anyway, if you're a Yankee fan and want to debate the question of whether Mattingly, Murcer and Stottlemyre were Yankee "greats" or did their lack of a World Series ring disqualify them from that distinction, add your two cents to this HybridTalk discussion thread.

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