Seriously, you guys must be absolutely of the reservation. A 50 dollar casino stock has a conf call around noon, i couldnt even guess how many times the LRPs were hit in a 20 min stretch. How is it that every real trader i speak with, thinks that what you have done with listed trading is an abomination? Yet all anyone hears from NYX mgmt is the praising of a laughable hybrid mkt.

by jt on May 6, 2008 12:12 PM

and also i was wondering what service the LRP actually provides for the trading public...?

by jt on May 6, 2008 12:26 PM

i have come to fully believe that the nyse and sec could care less about people who make their living trading these markets on a intraday basis. It's very sad.

by josh on May 6, 2008 1:23 PM

I agree with you guys about the Hybrid. There is absolutely ZERO liquidity right now. The loyal customers have been very patient for a very long time. I really dont know anyone happy about trading on the NYX Hybrid. I guess all we can really do is wait for the next round of changes to take place. HOPEFULLY the specialists will add some liquidity, make trading a little more orderly, and create a better overall market. We could really use some good news Ray. Thanks

by tony dey on May 6, 2008 5:30 PM

Agreed. The hybrid market has created a playground for programmed trading. Trading on the NYSE has turned into a technological arms race. Power has been transfered from the many to a select group....just the opposite of capitalism, which the NYSE used to represent for so many years. Yes, it is very sad.

by Ron on May 6, 2008 6:30 PM

JT -- LRPs are triggered about 400-500 times in total per day across the entire NYSE, a colleague tells me. The "slow quote" condition you're seeing -- which occurs about 140,000 times a day -- almost always is the result of a "manual" trade being entered into the system on the trading floor. While the details of the trade are being quickly keyed into a trade-reporting template, the quote is labeled slow.

Consider those numbers against the fact that we post about 40 million quotes per day. Our executions are completely automated (including automated participation by the trading floor) a little more than 90 percent of the time.

We're not looking to post "fast" quotes 100 percent of the time. We're looking to have specialists and floor brokers there to provide value to their customers when appropriate. When the market is unusually volatile, we see the "manual" participation rise to 20 or 30 percent, and I think that indicates that there's still value to be had from human interaction in the process.

As far as what we've been saying is concerned, all I see here these days is people talking about the things we're doing to make ours a better market.

Josh -- If what you're saying were true, we wouldn't be rolling out one initiative after another to encourage people to add liquidity. If we could care less, would we be offering you a public venue to say so, and would I bother responding?

I think I speak for everyone here in saying we're dead serious and sincere about this business. I hope the proof of that will be in the results -- if we can get the changes we're looking for and if those changes have the desired positive impact.

Tony -- I hope the proposals that are in the works will create the changes you're seeking -- namely, more price improvement and value-added participation.

Ron -- I hear you, but please be aware that many customer have given me the exact opposite point of view. They believe control used to be concentrated only in the hands of specialists and floor brokers; now they tell me we're providing customers with more control and flexibility in how they access the market, as well as more information.

Me, I think we need a balance between on-floor and off-floor participation, and we're working on creating a healthy, vibrant balance between those components.

Thanks for writing, all.

by Ray Pellecchia on May 6, 2008 8:31 PM

The really sad part is that even though the NYSE Hybrid market is now dominated by Black Box programmes and the Bids/Offers they represent are not real but "pulled away" in nano seconds before they even have any chance of being executed and add NO value at all to the market place. Most often all they do is create false markets and take advantage of any real stability in the system. Thats why any legitimate size on the bid/offer doesn't exist anymore. The NYSE should reduce the cost for limit orders, hits/takes and instead charge for cancellations. Maybe then we would get more specialist participation, and a much more stable market place. thanks

by tony dey on May 6, 2008 8:43 PM

Tony -- Thanks for the suggestion, which I'll pass along.

by Ray Pellecchia on May 7, 2008 6:20 AM

ray, with all due respect, when the quote is slow, how is making a few hundred share print 40-50 cents inferior to the inside market, a service to anyone? (whether it happens 1/100 times or 1/10000)

And as far as the statistics you have given me...(400-500x/day) I am not talking about GE, citi, motorola, and other stocks where you need a major event to have any volatility. I am talking about small cap stocks that have no float. I would be willing to guess that of the 500 times and LRP is hit, 490 are triggered on the open, with no float stocks, in the news, where the LRP values are WAY too close.

by jt on May 7, 2008 8:07 AM

What I would really love to see is for the powers that be who have actually seen the way stocks traded pre hybrid to sit down and watch a stock for 5 minutes. There is no way after seeing the computerized nonsense and massive price changes on flickers of quotes, that they could say that hybrid or reg nms is beneficial to trading. Pre hybrid, my avg daily volume was 500,000 a day, of wich 75% was done on the dot. Now it has dropped to around 150,000 of which maybe 25% is done on the dot. And what has happened to me is just a glimpse of what has happen to every trader that I speak to (both larger or smaller traders). If reg nms is the main reason that the nyse was forced to create the hybrid, I feel that there should be a campaign led by the nyse to get reg nms overturned. I love trading, but lately watching what has happened to the mechanics of trading and the markets has been very frustrating. As traders we all know that being able to adapt is the key to success, but it is very difficult when you know that something (hybrid, reg nms) just isnt right.

by josh on May 7, 2008 8:10 AM

The difference between a slow market pre hybrid and the slow market now, is in the past a trader could actually get a piece of the print that would happen. In this market all a slow market does unfortunately, is make the nyse quote irrelevant.

by josh on May 7, 2008 8:41 AM

Interesting discussion, though it looks like all the whining has one thing in common: folks talking about the quality of trading equities on NYSE...Not derivatives, which is where contribution margins are higher, costs lower, and the real transformation of this bourse can be seen. Arca brought options to the party in a big way as well as best-of-breed technology. With AMEX entering the mix, this segment should grow nicely. Ray, could you post the current (1Q) revenue mix?

That is, what percentage of revenue comes from equity trading, option trading, bond trading, data fees, listing fees? And it'd be great if you could also share YoY comparisons of those numbers to illustrate how the company is transforming itself. Seems most of the complaints are from a shrinking base of stakeholders, and it'd be great to see that evidenced in the above metrics.

Great game last night. Finally the Tribe and Yanks are fairly matched. Also, if you noticed during the Yanks/Tribe series in Cleveland, they brought back the "Hate the Yankee Hankee." Does NY miss Torre?

As always thanks for your time and effort.

by Barry K on May 7, 2008 9:17 AM

Barry -- The breakdown of revenues for 1Q 2008 and 1Q 2007 is on page 6 of yesterday's press release

To summarize for 1Q 2008, derivatives trading accounted for 25 percent of NYSE Euronext's revenues; European cash trading, 20 percent; U.S. cash trading, 13 percent; software and technology services, 13 percent; market data, 12 percent; listings, 12 percent; other, 5 percent.

by Ray Pellecchia on May 7, 2008 2:16 PM

ron & tony, i think the backing away is even more of a problem than the LRPs. and quite frankly i still don't even know how the boxes are legally getting away with it.(maybe you can fill me in...???) I can not tell you how many times decent size is offered and i am filled on nothing. Honestly, it's so comical, i just limit 10-20 cents through the mkt in order to be sure i get something...

by jt on May 7, 2008 2:53 PM

my favorite is when you are offering lets say 1000 shares and you get taken for 100 shares and then the stock immediately reverses. must happen to me 50 times a day. These programs are being allowed to put up bogus bids and offers, get filled themselves for 100 shares and then cancel. The canceling by these blackboxes has gotten out of hand. I believe that if some program gets a fill once for every 100 cancels, there is a problem.

by josh on May 7, 2008 4:08 PM

JT, I dont have an answer for you but it is destroying the quality of the NYSE listed market. It will also make it almost impossible for the specialists or legit market makers to add liquidity or stabilize the hybrid system. Its also the reason why the dark pools are taking away market share. Maybe if the NYSE started charging a fee for excessive cancels it would eliminate some of the abuses by black boxes. thanks

by tony dey on May 7, 2008 8:25 PM

Thanks for posting the revenue breakdown. It looks like derivative trading is the fastest growing segment. Also, it looks like it accounts for nearly 2x what equity trading contributes.

Can you give a sense of how the margins differ among the various revenue streams? i.e., are gross profit margins higher for options than for Listed equities? how to margins for data compare to margins for equity trading? And finally, are the gross profit margins the same for ETFs traded on Arca as they are for Listed stocks traded on the floor? The last question seems fairly obvious, but it'd be interesting to see just how dramatically different the contribution margins are between the two platforms. Finally, it's been said that the NYSE will let the market dictate the future of the floor...From the grumblings I read here by traders it seems that the market is unhappy with Hybrid. Moving Amex floor folks to the blue room seems like it might add costs...Is this the case? Are there plans to move some Amex stocks to Arca?

As always, thanks for your time and insight.

by Barry K on May 8, 2008 9:52 AM

Barry -- Sorry, we don't break out the margin information you're requesting.

On the Amex question, our plans were discussed a bit during Tuesday's earnings call. A transcript and an archived Webcast are posted here:

http://ir.nyse.com/phoenix.zhtml?p=irol-eventDetails&c=129145&eventID=1790621

Thanks for writing, Barry.

by Ray Pellecchia on May 8, 2008 12:16 PM

Thanks Ray for taking time to post our concerns. Hopefully people at the NYSE are reading your great blog and address these problems. Iam positive that all they need to do is actually watch stocks trade any day of the week to see exactly what your customers are talking about. We all want the Hybrid to succeed and the NYSE to once again be the best place to do business.

by tony dey on May 8, 2008 9:06 PM

JT -- Sorry, I made a mistake in my response to you above. Manual trades happen 30,000-40,000 times a day, not the 140,000 times a day I stated. I got that number over the phone and must have heard it wrong. My apologies for that.

by Ray Pellecchia on May 12, 2008 6:40 PM