Ray....you guys continue to kid yourselves with the value of "human interaction".

News Corporation, ADP, CA, CME and STX are all proof that the NYSE listed companies themselves realize they are getting a raw deal from the NYSE.

Wake up.....customers want to trade electronically, and that is why the NASDAQ is killing you in the listings race and in the market share of trading race.

by John Villa on December 16, 2008 8:50 PM

John – If you think anyone is moving to Nasdaq for anything other than a package of marketing dollars, you’re the one who’s kidding yourself.

You cite a few names that have left the NYSE; they are among the dozen who have ever done so voluntarily. Meanwhile, in the last eight years alone, 165 companies have transferred to NYSE from Nasdaq.

For customers who want to trade electronically, we offer that, and with our new enhancements, we’re doing so better than before. For those who want human value-added interaction, we offer that too. That combination is part of why our share of trading in NYSE-listed stocks is ticking back upward. During the recent (and current) market turmoil, growing numbers of customers have come to us for the human-judgment component that helps resolve big imbalances, gets difficult trades done, dampens volatility, and avoids the problem of cancelling tens of thousands of bad-price trades that has plagued the electronic markets during this period.

Thanks for writing, John.

by Ray Pellecchia on December 17, 2008 8:53 AM

yeah but ray, c'mon, how does a human intervene and add value to markets that trades with such enormous spreads, slippage, backing away? Not trade? Seriously... What will a human add? "ah yes bob, the current market of xyz at 9:45AM is 36.05x.95...what would you like do?" customer: "ok jim, sell 2000 at the market" result: 100 done at 05, 200 done 35.90 500 done 35.75 500 done 35.50 etc etc. And this by far is NOT a fabrication. (and now lets watch as stock trades 37.00 1 minute later)

Sorry to keep harping on this but this is what MY CUSTOMERS are telling me.

Thanks and Happy Holidays,

jt

by jt on December 17, 2008 11:02 AM

Ray, The NYSE had 100% market share 8 years ago too. Stop living in the past, times have changed and the NYSE seems to be scrambling.

by Alan George on December 17, 2008 2:39 PM

JT, thats very accurate of todays market. Thats why it will NEVER really get better unless there is a set spread of a nickel. It will actually reduce trading costs across the board and add much needed depth & quality to the market. Guys can send MKT orders for 1k, 5k, 10k, whatever, and not be totally raped like in todays market. Its the only real answer to make the NYSE viable again. Also, humans will really add value in a nickel market. Thanks.

by tony dey on December 17, 2008 4:57 PM

JT – Today NYSE largely trades electronically, including the Designated Market Makers using algorithms, the Trading Floor Brokers using algos and e-Quotes, and Supplemental Liquidity Providers sending orders solely electronically. We do also feature the ability to add human interaction to the equation, which is particularly useful at the open and close and for large trades in between. You’re not going to get a worse price because of that interaction; in fact, because of it you have a greater possibility of getting a better price.

I think that it’s also worth noting that our DMMs and SLPs are financially incented to add liquidity – literally, paid for performance. Brokers, I would also argue, have to get good prices for client orders or they won’t have those clients for long. No other market features these types of participants, either required or incented (or both, as is the case with DMMs) to add liquidity.

Maybe the blog is not the best way to get at the heart of these issues. I’d like to invite you and the others who have been writing to me to come in for a visit to the NYSE Trading Floor and see first-hand what’s going on. Maybe there can be better understanding via trader-to-trader conversations rather than our going back and forth on the blog. Let me know if you’re interested.

Alan – I wasn’t comparing today with eight years ago; I said that over the last eight years, more than 10 times as many companies transferred to NYSE from Nasdaq compared with the number that have done the reverse. I was just countering the “proof” that John had offered up. And yes, eight years ago, NYSE market share was 80+ percent, but that was before the age of competition in the U.S. equities markets. Not to mention, it was before the rise of internalization, which today accounts for more trading in NYSE-listed stocks than Nasdaq does, and adds nothing to price discovery and the quality of trading.

All -- Since beginning to roll out our enhancements in October (and we’re not even done yet), the amount of time the DMM is at the best bid or offer has soared, the size of our best quote has grown, and intraday volatility has fallen more at NYSE than on other markets. NYSE market share has increased to 26.7 percent in December, month to date, from 24.1 percent in September. Over that period, Nasdaq’s share has declined to 20.6 percent from 23.1 percent in NYSE-listed stocks. We still have work to do, but we are encouraged by these initial results.

Thanks, everyone, for writing, and thanks to the colleagues I tapped for input and perspective on this.

by Ray Pellecchia on December 17, 2008 11:07 PM

Ray,

Come on, let’s talk about current events.

Monster.com and Clean Harbour doesn’t quite compare with you losing CA, CME, ADP, Seagate, Mylan, Jack in the Box, and now Newscorp.

I think the others have made my other points.

JV

by John Villa on December 18, 2008 12:58 PM

John -- OK, if we're only looking at the here and now, then NYSE is winning the market-share battle (contrary to what you said in your original comment), based on the numbers I supplied above for the last three months.

Seriously, I'm not going to break my arm patting ourselves on the back about that. The business is too dynamic and competitive to rest on your laurels. We are in this for the long term, and the results of three months or even 12 are exactly what they are: battles, not the war.

I understand your point, John, and I hope you hear mine as well: don't count us out. Thanks for writing again.

by Ray Pellecchia on December 18, 2008 2:56 PM

The point about companies switching since 2000 is useless since the landscape has drastically changed. I would guess the last few years the battle is much closer, with you guys winning on numbers but NASDAQ winning on market cap, just like NASDAQ dominates in number of IPOs but you win procceds raised. The uptick in market share is promising, what is your guys targets for 2009?

AG

by Alan George on December 18, 2008 3:13 PM

Alan -- Thanks for asking, but I'm sorry, we don't provide forecasts or guidance.

by Ray Pellecchia on December 18, 2008 4:05 PM