New Rules of the Road for Trading at NYSE

By: Ray Pellecchia: File Under: NYSE

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This Information Memo lays out very thoroughly (13 pages) and in simple-enough-that-even-Pellecchia-will-get-most-of-it language the major changes in the NYSE trading model we've been talking about lately on this humble blog.

Topics include:

-- Enhanced reserve interest capabilities;
-- Designated Market Maker (DMM);
-- Priority and Parity;
-- eQuotes to OpenBook;
-- d-Quote enhanced functionality; and
-- Elimination of CAP (Convert and Parity) orders.

When I say "thorough," I mean that the DMM section alone includes the following parts:

-- Transtion from Specialists to DMM and DMM Units;
-- DMM and DMM Unit Obligations;
-- DMMs retain an affimative obligaton;
-- DMMs no longer have a negaive obligation;
-- DMMs are not the "responsible broker dealer" for agents' orders;
-- DMMs have Depth Guidelines and Minimum Quoting Requirements;
-- DMMs retain stabilization requirements;
-- Information available to DMMs;
-- Handling manual transactions;
-- DMM Interest and DMM Capital Commitment Schedule;
-- DMM Interest and DMM Algorithms;
-- Limitations on the Execution of DMM Interest;
-- Capital Commitment Schedules (CCS);
-- Execution Logic for Trades Involving CCS Interest; and my personal fave:
-- Using CCS Interest for Price Improvement.

You get the idea. I think there's a lot of useful info here, and I've been trying to to think of a way to break it out somehow, but until that scheme comes to me, preferably with a slathering of cranberry sauce, here's the whole kit and caboodle.

In the meantime, I hope you and yours truly enjoy your Thanksgiving.