Floor wins 'upstairs privilege'; NMS exceptions; everybody in the (dark) pool; more links

By: Ray Pellecchia

File Under: Liffe derivatives, MatchPoint, NYSE

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The NYSE Floor Wins an Upstairs Privilege -- New York Stock Exchange floor brokers now don't have to go upstairs in their search for liquidity beyond the NYSE. That's because the Securities and Exchange Commission just approved the Big Board's booth premises rule filing...These changes will allow a Big Board member organization to run a booth premises on the floor similarly to an upstairs office. Although there was no legal prohibition of a floor broker booth, exchange rules-until these changes-had discouraged such floor booths. For example, member organizations' staff were constrained in how they were allowed to process orders sent to the booth. (TradersMagazine.com)

There's an Exception to Every Rule -- The decision by the Securities and Exchange Commission last month to exempt two more types of transactions from Regulation NMS' Order Protection Rule. (See Rules & Regs section for details) brings to 13 the number of the rule's exceptions and exemptions. That's nine exceptions and four exemptions. Some are arcane. Some are likely to be used frequently. The exceptions fall under Subsection (b) of Rule 611. The exemptions fall under Subsection (d). Traders Magazine summarizes them below. (TradersMagazine.com)

NYSE Euronext Develops Dark Pool for Crossing Portfolios -- By the end of this summer, NYSE Euronext is expected to launch NYSE MatchPoint -- a point-in-time benchmark crossing-network geared to large index funds and mutual funds looking to matching portfolios of stocks. The move follows the rapid proliferation of dark pools accounting for as much as 12 percent of U.S. stock trading volume according to research by the TABB Group.

...According to Jim Ross, VP NYSE MatchPoint, the exchange is wakening to the value proposition that choices are important in its offering. More importantly, he argues that exchanges can offer something that ATSs cannot -- neutrality and a robust regulatory and surveillance infrastructure. And whereas other ATSs have taken a more inclusive approach, mentioning Liquidnet's focus on buy-side to buy-side trading), "The concept of the exchange is to be more inclusive and being a center stage for distribution and for everyone to participate on an equal basis," says Ross.

In stark contrast to the transparent and continuous electronic matching and auction environment that NYSE operates via Hybrid and the all-electronic trading platform NYSE Arca, NYSE MatchPoint will be an opaque, call-market that will initially match orders after the close of trading at 4:45 p.m. Once that match is up and running, NYSE MatchPoint will carry out a full schedule of intraday matches starting at 9:45 a.m. and then add on hourly matches from 10 a.m. through 3:00 p.m. (Wall Street & Technology Blog)

Liffe Plan Puts Traders at Odds -- Liffe, the futures exchange owned by NYSE Euronext, plans to overhaul its interest-rate trading protocols after small, independent traders complained of a market increasingly dominated by automated trading systems. Now, some of those big automated traders are pushing back. (WSJ.com/subscription)
[Strange -- these issues sound oddly familiar. -- RP]

Management lessons from Tony Soprano -- Life imitates art. In my posting of June 13th, I speculated that given the way we romanticize thugs, someone will bring to market a book about Tony Soprano's lessons for business. A few days later, Kevin McCarthy wrote to point out that indeed, there is a book on the market entitled, Tony Soprano on Management...I acquired the book in hopes that I would discover a kindred spirit: someone who gets it that management is a grave responsibility requiring people of intelligence, energy, grace, and character. What I discovered might be a parody of a bad management book, in the style of the gleefully offensive Onion web site. (Dean Bruner's Blog)

Welcome to Wednesday, folks. From the annals of rock music: On This Day in 1965 -- Bob Dylan shocked his fans at the Newport Folk Festival when he played electric guitar during a performance with the Paul Butterfield Blues Band. (NYTimes.com)

Tags: New York Stock Exchange, Hybrid Market, NYSE, NYSE Euronext, NYX, trading, stock market, trading floor, specialists; floor brokers