WSJ: 'NYSE Speeds Trades to Meet Competitors'

By: Ray Pellecchia

File Under: NYSE, NYSE Amex, New York Block Exchange, Options

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NYSE Speeds Trades to Meet Competitors (WSJ.com) -- Excerpt:

The New York Stock Exchange is fighting back against competitors, launching a plan to pay brokers for sending orders to the Big Board and speeding up trade execution in an effort to stem its declining market share.

The 216-year-old Big Board, whose historic trading franchise took a hit in recent years due to outmoded technology and trading models, is in the midst of an ambitious plan to remake itself as a central trading venue -- even if most trading no longer happens physically on the floor. The exchange, part of NYSE Euronext Inc., is doing so as rivals with much lower overhead costs continue to gain share through aggressive pricing and faster technology.

The Exchange's trading floor, which has shrunk by more than half in recent years, will get a bit more crowded Monday when about 370 options traders and staff from the former American Stock Exchange move to one of its empty trading rooms. The NYSE floor had just 1,200 individuals at the start of this year, down from 3,000 five years ago before electronic trading eliminated many physical positions.

Also starting Monday, the Big Board will for the first time make payouts to all brokers who proactively send orders to buy and sell shares. Such pricing "rebates" have long been used by electronic venues such as the Nasdaq Stock Market, part of Nasdaq OMX Group Inc., and BATS Exchange to lure trades.

Pricing is one component of competitiveness; speed is another; the others are new trading tools and rules designed to maximize liquidity. And the only differentiated market model around, don't forget that one. Stay tuned here for more on this front.

Hope you're having a good Monday, market notwithstanding. I was on the trading floor this morning for the start of trading here for NYSE Amex Options, and there was a lot of excitement on the floor. More on that later. In the meantime:

Today in NYSE History
02 March 1844 -- The initiation fee for new members was raised to $400.