• Jul
  • 14
  • 2008
  • 1:08 PM

The Nasdaq Decoder Ring, Episode 2: Much Ado About a Questionable Distinction

By: Ray Pellecchia
File Under: NYSE

"My decoder ring!" From "A Christmas Story," Photo: NPR.org

I really hadn't planned to trot out my Nasdaq Decoder Ring so soon after its first use. I don't want to get like Nasdaq and start talking about the other guy's market more than I do my own. But I got this question this morning in response to the debut post:

Question: Are the market share losses and now Nasdaq actually trading more NYSE shares than NYSE does a publicity stunt too? -- Mark

Mark -- Thanks for writing. The decline in our share of trading is real. I've written here among other places about things we're doing to provide even higher market quality and thus strengthen our competitive position.

On Nasdaq trading more NYSE shares than NYSE does, this claim is based on last Friday's trading. Here are the numbers. Please forgive my crude table; had some trouble inserting a chart.

Tape A (NYSE-Listed) Trading on 11 July, 2008

____________________Full Day_________Regular Hours
NYSE________________1,727,003,577____1,727,003,577
NYSE Arca___________ 1,093,206,070____1,060,418,594
NYSE Group__________2,820,209,647____2,787,422,171
NYSE Group + CS2 ____ 2,867,187,582
CS2_________________ __46,977,935

Nasdaq______________1,730,218,818____1,700,024,282

Now if you take Nasdaq's claim to have beaten us and pass it through the decoder ring, applying a bit of lemon juice, you'll discern:

1) The claim excludes our after-hours Crossing Session 2, but includes Nasdaq's after-regular-hours trading. Including ours puts us on top. Why exclude our after-hours volume but not theirs? Apples and oranges.

2) The claim excludes trading on Arca -- which does happen under the NYSE Euronext umbrella -- but aggregates trading on all of the platforms Nasdaq has bought up over the years. If your compare our U.S. markets vs. theirs, we're still almost twice theirs. Again, apples and oranges.

To boot, Nasdaq's press release conveniently doesn't mention its own rapidly slipping share of its own listed trading. A little selective in your reporting, Nasdaq, no?

I'm off this week, so posting here will be on the light side. But let's keep it real out there, or I'll have to lend the ring to a colleague.

Comments

Thanks for the response Mr. Pellecchia

by Mark Treichel on July 14, 2008 4:44 PM

Ray, all good and true color, but you are perhaps stretching things a bit by claiming Nasdaq is aggregating the systems they've purchased and not aggregating yours. All of the liquidity on nasdaq is indeed now combined on one single system. While Nyse's purchased Arca, it really runs very much as a separate system.
I think we'd all appreciate aggregating Nyse and Arca together and having Nyse claim the biggest liquidity pool by a wide margin!

by brian on July 14, 2008 6:33 PM

Thanks for the comment, Brian.

I was deleting some spam from the inbox and I think I accidentally deleted another comment on this post. If I did, my sincere apologies, and if the writer could re-send, will try to be more careful next time. Thanks.

by Ray Pellecchia on July 17, 2008 10:27 AM

wow! i have been trying to find out more information after reading the nasdaq press release about trading volumes. very informative. thank you for your post. it calms me and reaffirms my beliefs in the nyse. it is very frustrating as a stockholder to read an article that is clearly mal-intentioned and not be able to find a response from the nyse. i understand that by doing so,we could give them more credit than they are due, but something as simple and elegant as this board works wonders. much appreciated

by joshua on July 20, 2008 1:09 PM

Good stuff Ray! Been waiting for some info on this for the past week. I suspect that there is even some additional Euronext trades in NYSE listed issues that could be added as well.

by Bart Ward on July 21, 2008 5:45 PM

Thumbs up! Really good stuffs that u have posted and appreciate what u have done, Ray. Keep it going, pls!

by icann on July 28, 2008 8:51 PM

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