Good stuff Ray. Your customers dont want another Nasdaq.

by tony dey on October 30, 2008 7:51 PM

To my understanding Supplemental Liquidity Providers (SLPs) is designed to reward aggressive liquidity suppliers, to promote add liquidity on the NYSE.

SLPs will be obligated to maintain a bid or offer at the National Best Bid or Offer (NBBO) in each assigned security at least 5 percent of the trading day.

by ceoworld on October 31, 2008 6:09 AM

Ray, I feel your comments are very similar to your excitement over the over-hyped hybrid model that you claimed would solve the world's problems and the NYSE market share continued to decline. Investors have voted with their feet and prefer trading on NASDAQ. When is the NYSE going to wake up to that and drop these feeble attempts to save a dying floor. Pull the plug already and try to compete with the better, faster more efficient NASDAQ trading platform once and for all. The only other choice would be to humbly ask NASDAQ to buy you before you loose more money for investors who trade on the NYSE and your own shareholders.

by John Vill on October 31, 2008 7:44 AM

Tony -- I agree, of course. Thanks as always for writing.

John -- I'll acknowledge that I was excited about Hybrid. What I didn't realize in advance was that while it would get us to compliance with Reg. NMS, it would also move us too far toward automation and away from the added value that our floor participants provide.

We've learned a lot from that, and we've taken it all into account with the new changes. I understand your skepticism, but I think the results will speak for themselves. We'll see very soon. Thanks for writing.

by Ray Pellecchia on October 31, 2008 8:11 AM

Hi Ray,

The rule for DMMs and SLPs to provide liquidity at the NBBO price 5% of the time doesn't sound very impressive. Seriously... five percent of the trading day? That calcs out to about 40 minutes of the day. In addition, they aren't required to make a 2-sided market at the NBBO price -- they get to choose a side. This is laughable. I could easily find 40 minutes to quote on one side of the mkt in a stock every day and never get hit a single time. This just looks like window dressing.

- TM

by Traderus Maximus on October 31, 2008 10:09 AM

I can understand a slower rollout with regards to quantity each day. Why havent SLPs been rolled out in conjunction with DMMs?

by jt on October 31, 2008 11:46 AM

Sorry, my mistake.. 5% of the trading day is more like 20 minutes.

by Traderus Maximus on October 31, 2008 12:40 PM

TM -- Those are the requirements for Supplemental Liquidity Providers, not Designated Market Makers. Also, please note, it's a minimum of 5 percent -- they can do more, and let's see how they do.

For DMMs, it's at least 5 percent in stocks with average daily volume of 1 million shares or more, and at least 10 percent in those with less volume; and they absolutely do have requirements for two-sided market making, dampening volatility etc. that are more demanding than those of any other market maker or market participant out there.

by Ray Pellecchia on October 31, 2008 12:58 PM

JT -- This is a lot of change in a short amount of time, systems-wise, so we're parsing it out over a period of several weeks. Supplemental Liquidity Providers may start as early as next week in the 500 most active stocks. Will keep you posted, JT. Thanks for writing.

by Ray Pellecchia on October 31, 2008 1:27 PM

Ray,

Has the NYSE’s market share increased for the stocks trade in the new model?
Are you collecting those stats?

by Scott M. on October 31, 2008 1:27 PM

Scott -- Sorry, we don't break down share of trading by individual stock. But I hope to have reports of our results as we get further along with the rollout. Thanks.

by Ray Pellecchia on October 31, 2008 1:43 PM

Hey Ray,

First of, props to "Traderus Maximus" on his name.

Second, I think Scott asks a great question and I'm surprised you can't answer it... You guys should totally break down stats individually on names, because it will let you know if the pilot programs are working, before you go nuts and roll them out.

Imagine if the NYSE had done that initially, with Hybrid? Maybe it would have given more of a clue as to what the future held.

I am impressed with the constant tweaking and innovations being made. I can't believe we're nearly two years into Hybrid. Lately, I'm having a hard time figuring out if I'm just getting used to it or if it has gotten better. But whatever, the good news is that you guys seem to be attacking the right problems now, which can only be good eventually.

Thanks, Ray.

-DT

by Dinosaur Trader on October 31, 2008 8:47 PM

DT -- On the report card, I hear you, and of course we compile more information for internal analysis than we publish, as any company does. But I do hope to have some before/after data in aggregate sometime after we complete the rollout.

On the trading, my understanding is that the Trading Floor's participation levels are on the rise, and maybe that's part of the difference you're seeing. Part of it might be your own evolution, if you'll forgive the pun. Beyond that, you're definitely right that we're now full-on attacking problems. There's a lot more intensity and energy here these days, and I'm glad for that.

Thanks for writing.

by Ray Pellecchia on November 3, 2008 9:27 AM

hi,
this may have been posted already, but, are the incentives to post liquidity on NYSE SLPs greater than the 'make/take' rebates offered on other ECNs? Thanks.

j

by jt on November 3, 2008 12:02 PM

JT -- The rebate may be higher on ECNs, but with NYSE having the lowest take rate (8 cents per transaction) and the greatest liquidity, the SLP's chance of getting filled on NYSE is greater (versus a model where the take rate is around 30 cents). You have to get filled to get paid, and you can get filled more often here.

Thanks for writing, JT.

by Ray Pellecchia on November 3, 2008 3:31 PM