• Jun
  • 22
  • 2007
  • 4:57 PM

Handling Blackstone and Russell

By: Ray Pellecchia
File Under: NYSE

Had a meeting cancel this afternoon (yay!) so I tuned into the conference call on the Russell Reconstitution. Heard no system issues, and all equities here were closed by 4:15 p.m., ETFs by 4:18.

Heard separately that we had record message traffic, top-10 share volume, and that we had record Market on Close orders (132,000, compared with previous record of 105,000); and record Limit on Close orders (198,000, vs. previous record 83,000).

Also heard the following from my Media Relations colleagues about the Blackstone IPO opening:

First trade at NYSE was at 9:52:39 a.m. at $36.45, for 18 million shares. Yes, one trade, 18 million shares. That one trade represented about 500 buyers and sellers coming together at that level -- not one single block.

That's actually not that uncommon: typically the first trade of an IPO here can represent 10 percent or more of the float.

I'm also told that just before we opened, other markets were quoting and executing BX at $45/share, with the next trade at $42/share, a big indication of one-sided markets. Not to mention, why would you want to buy it at $45 or $42 when you could get it at $36.45?

Here's an Associated Press report on that. Excerpt:

Before the NYSE gave the green light to trade Blackstone's stock, the Alternative Display Facility, which reports trades executed by brokers, quoted trading in the private equity firm's shares.

Thinking the shares had opened, an electronic exchange called the National Stock Exchange executed four trades of Blackstone's stock totaling less than $100,000.

A National Stock Exchange spokeswoman said the exchange canceled the trades as soon as it realized they were executed before the stock opened. The ADF, which is operated by NASD Inc., could not immediately comment on what happened.

While computers are faster, a New York Stock Exchange spokesman said the mix-up bolsters the argument that humans are still better at finding the best price.

Not a bad day.

Now, can we do something about the Dow falling 185.58?


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Comments

Ray - Great blog! Please keep up the great work. Your posts, links, and insight, as well as the fostering of open discussion among stakeholders (i.e., traders) is also valuable. So, thanks.

On another note, how will the pricing for ETF listings on Arca work? Will the same listing fees for companies that list on Arca extend to ETFs that list on Arca?

Thanks for your continued insight. And, please check out http://arcaex.blogspot.com for a blog that I created years ago to serve as a permanent record of the amazing achievements of Arca and a rare change to the capital market structure due to the intersection of brilliant technology, extraordinarily talented managers and sweeping regulatory changes.

Thanks again for this great Hybrid Talk blog!

by Barry K on June 23, 2007 3:12 PM

Do equities and ETFs ever close so late on days other than the Russell?

Thanks for running this blog Ray!

by Vlad Khandros on June 24, 2007 9:30 PM

Barry -- Thanks for the kind note, and for the tip about your blog. My compliments -- keep on writing! Will check on your question about ETFs, and come back to you.

Vlad -- Equities and ETFs usually close at 4 p.m. or very shortly thereafter. Closing can take longer when there's a big imbalance to resolve on the closing trade, and events such as the Russell reconstitution can cause that. Hope that answers the question, Vlad. Thanks for writing!

by Ray Pellecchia on June 25, 2007 7:39 AM

Barry -- Listing fees for ETFs are less than those for common stocks. Please see this link for the fee schedule:

http://www.nyse.com/about/listed/1154945895106.html

by Ray Pellecchia on June 25, 2007 9:17 AM

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