The little, anonymous, portfolio-based matching engine that could....

By: Jim Ross

File Under: MatchPoint

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Barry K wrote in response to Introducing NYSE MatchPoint:

Great to see you're blogging on Exchanges. NYX's leadership obviously knows how to find and integrate, companies that can add value, as well as provide significant economies.

With so much focus on marquee deals such as merging with another bourse, deals like the acquisition of Matchpoint can get overlooked.

So here is a link to the NYX news release about the Matchpoint acquisition which provides some background:
http://www.nyse.com/about/publication/1156157016600.html

Jim, when do you plan to go live with Matchpoint?

Thanks, and I look forward to reading more about MP.

Barry K, you make a good point. NYSE Euronext has been doing some high-profile deals over the past few years. Arca and Euronext are the most obvious ones and the rollout of Hybrid, Reg. NMS, a new bond platform, ETF business and options platform are pretty cool strategic initiatives.

But there is one acquisition that has not gotten much attention. It was actually the first the NYSE did after going public: the acquisition of a trade-matching platform called MatchPoint. And while is it not as high profile as the businesses and initiatives above, MatchPoint represents a profound and intriguing strategic shift for the NYSE.

First of all, MatchPoint transacts by aggregating liquidity at distinct points-in-time, a much different approach from NYSE's Hybrid and NYSE Arca's continuous-trading model. Second, MatchPoint accommodates both single block orders AND portfolios. Currently, no exchange provides transactional capabilities for the portfolio-based investor (not to mention integrating them with single block orders too). Third, MatchPoint is not only completely anonymous but it also has no displayed order book or order information. Most exchange trading systems traditionally display order interest or "imbalance information". Oh, and finally, MatchPoint will trade all NMS securities, not just NYSE-listed securities. For the first time in its 215-year history, NYSE through MatchPoint will begin trading public securities listed on other markets.

So while MatchPoint's acquisition is not front-page news, it represents some significant changes to NYSE Euronext's exchange model. Instead of a "one size fits all" approach, MatchPoint is a piece of the sophisticated collage of products designed to meet the diverse needs of the investing community. We plan to launch it in September-October, pending SEC approval.