CAP Orders to be Replaced with Better Capabilities for Floor Brokers

By: Ray Pellecchia

File Under: NYSE

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Just out from Traders Magazine: NYSE to Phase Out "Go-Along" Orders. Excerpt:

..."We are exploring the replacement of CAPs with more effective alternatives that better respond to broker and customer input," an NYSE Euronext spokesperson said.

CAP, or convert-and-parity, orders have long been an important part of trading on the NYSE floor. Also known as "go-along" orders, they are handled by specialists on behalf of floor brokers busy with other tasks.

The institutional orders require specialists to trade along with market prices, but never set them. That allows the customers to quietly transact at prices that don't vary too much from the day's average.

Since the advent of the NYSE's Hybrid marketplace, however, use of CAPs has dropped significantly. The NYSE has built trading functionality into its handhelds that lets floor brokers do the job themselves. ...

The NYSE acknowledges CAPs are less useful. "The CAP order doesn't work as well in this environment," Lou Pastina, the NYSE's executive vice president of operations, told Traders Magazine recently. "So we think algorithmic access is a much better tool. We will upgrade the brokers to that."

We're obviously continuing to work to put more value-added in the hands (and the hand-helds!) of floor brokers.