I shoulda, woulda, coulda posted this earlier today, but better late than never. Our new NYSE Order Imbalances product went live before this morning's opening. It increases the amount of information available in advance of the two most critical points of the trading day.
Google and CNBC will be the first information providers to buy last-trade data from NYSE and offer it free to the public. Real time. Free to the public. Authoritative, from NYSE. All good things. We announced a couple of weeks ago that this was coming "by July 1." Sooner is better! Been waiting a long time for this announcement, and I'm glad it's finally here.
The reconstitution takes place this Friday, 27 June. Some 164 NYSE-listed stocks will be entering or exiting the Russell indexes.
According to the firm: "ConvergEx also tripled its percentage of NYSE market share during the same time frame, which has led to a significant move up the NYSE's Broker Volume Top 10 rankings. The NYSE Broker Volume Top 10 provides a way to identify the leaders in equity orderflow and lists the top 10 NYSE member firms by volume."
It's also the day for the quarterly share rebalancing of the S&P 500, the S&P MidCap 400, S&P SmallCap 600 and S&P REIT Composite Indices.
Our memo includes the names of the 155 NYSE-listed issues that will be added or deleted from Russell Indexes; a rundown on special procedures for Limit on Close and Market on Close orders; and five contingency scenariios.
Here are some of the changes that I think are going to be real positives.
"This positions the specialist to actually add value in the market again."
The product will allow media and Internet organizations to buy real-time, last-sale market data from the NYSE and provide it broadly and free of charge to the public.
A Q&A with Mark Schaedel, one of my MDDCs (market-data-disseminating colleagues), about two new products: NYSE OpenBook Ultra and NYSE Order Imbalances.
The SEC's action is is not a final approval, but it is a big step forward. It's been a long process, but it's leading to the right result for investors.
NYSE Euronext CEO Duncan Niederauer at the Reuters Summit last month: "In periods like expirations, in periods of higher volatility like we saw last August and this past January, I think [the NYSE trading floor] is quite a differentiator because everyone else doesn't have a lever they can pull. So when you get into volatile periods like that, people want to use the floor or they want to get human judgment involved or they want to use the experts."
Good stuff coming on the data front in the form of two new products.
In a big stock with a big swing in its order imbalance at the close, floor traders prove their worth.
Or is it actually that the humans are defending themselves?
Larry Leibowitz on this week's earnings call: "We're talking to the SEC about changing the rules to make the market simpler, more conducive to electronic trading, but also allowing a role for a market maker with obligations, more of a liquidity provider as we evolve the specialist role...And then to continue to evolve the floor traders, have more functionality that makes more sense in an electronic world. So you will see in July, for example, rolling out algorithms in the handhelds, so that floor traders will be able to work algos from the floor, but also when large block trades happen, to be there to represent the customer. That will allow our upstairs traders to not feel that they are shut out when they give a trade to the floor, that they are also foregoing the benefits of the algo trading."
The pilot for electronic entry of Reserve Orders, which began on 23 April, will extend to all NYSE-listed securities beginning this Friday, 9 May.
Plus: everyone in the business knows what a CUSIP number is, but do you know what the letters CUSIP stand for?
["There] are current proposals in Washington to really get the traditional cash specialist business more in line with the current market structure."
Mid-Point Passive Liquidity orders offer price improvement, better fill rates and now, attractive rebates for active customers.
I'd be curious to hear any user experiences with the new order type. The comment box is open to you, as always.
Plus, to lift the heart a bit on a Monday morning: the sun lifts the rain in veils of mist, and a photographer in my town captures it.
We're obviously continuing to work to put more value-added in the hands (and the hand-helds!) of floor brokers.
Plus, a word of appreciation for Exchanges readers: thank you for not threatening to punch me in the face.
That's my boss talking to Nightly Business Report's Susie Gharib about NYSE.
...and says better connectivity between dark pools and exchanges is the best solution. Which is exactly what we're trying to do.
During a sample week, there were 2,518 outgoing calls and 960 incoming calls to portable phones on our trading floor, not to mention calls to and from the brokers' booths. I am of course not privy to these phone conversations, but I know that nobody on an upstairs desk is calling down to our trading floor -- or taking calls from the floor -- to talk about the weather.
Transaction growth across the board and across the Atlantic. Plus: numerical trivia, weekend edition.
"After years of academic research suggested that the rule was hindering trading without protecting prices, regulators eliminated the rule last summer, giving a green light to those eager to sell a stock short, even as it was falling.
"Some argue that the move unleashed a new era of volatility..."
Plus, in the historical-trivia department: the go-go years top the Great Crash.
“This is about providing our customers with greater choice and flexibility in how they access our market,” Larry says.
Choice and flexibility are getting to be the major themes here, as well they should.
Neither is a household name outside the Exchange community (at least not yet; apologies, Dick and Gordon!) but nonetheless, this is interesting news.
In crunch time, you can get it done here, and you can get it done at the right price.
Plus: you can get married in Gibraltar near Spain. Plus plus: happy birthday to the father of efficiency (and humanity) in management.
Not a panacea, but a step in the right direction.
The number of dark pools is exceeded only by... Read on for the rest of Mr. Selway's comment.
I've mentioned here previously, the capacity to accommodate these spikes in message traffic requires a lot of planning and investment on our part. It's largely unseen part of the exchange business, and I'm glad (and relieved!) when it bears fruit as it did today.
So says Tabb Group CEO and founder Larry Tabb, quoted in a brief Securities Industry News article with the wonderfully succinct headline, "Equity Venues > 55."
So much for the NYSE-Nasdaq duopoly you read so much about a couple of years ago. Competition appears to be more alive and well than ever in the equity markets.
With the futures up significantly this morning, NYSE is invoking Rule 48 today, as we did yesterday.
As the article goes on to point out, some traders have a very different point of view. Someone, please explain to me the reason why there's such a disconnect.
The rule provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could delay opening securities on the exchange.
Just came from a meeting where some NYSE managers were saying that not all the floor brokers were aware of the pricing change we announced on Friday, which I blogged about here.
What? People aren't reading my stuff? Heresy! I mean, WTH? (That's what the heck -- after all, this is a family blog.)
My feelings are so hurt.
OK, I'm over it. Maybe this is what happens when you announce something on a Friday: it gets lost amid the weekend anticipation. Or maybe I haven't been posting frequently enough, and people are falling out of the habit. Anyway, this post is a reminder.
Floor brokers currently cannot post orders on other markets while at the point of sale at NYSE, so unlike other Exchange users, they can't capture incentives that other markets offer to liquidity providers. NYSE believes this disparity places floor brokers at a competitive disadvantage to other Exchange customers and believes the proposed credit will mitigate the effects of that disadvantage while also attracting additional liquidity to NYSE.
Duncan in this week's earnings call, on our discussions with the SEC: "I think we're down to where we really just have two or three rules left..."
Twenty-three message traffic records were set in the last seven minutes of the trading day today.
I posted too soon. Just got a bunch more messages -- even more traffic records across more systems at today's close.
Half a dozen traffic records in a half-hour's time. That's why we spent more than $25 million on expanding the capacity of our systems last year. Someone thought that would be a much better use of the money as opposed to doing something like, oh, say, just for the sake of throwing something else out there...like dropping it into my bonus. Can you imagine? Me neither. Oh well. There's always next year.
Michael LaBranche: "We’re moving towards an integrated market making model. I think a lot of the barriers that exist in the business are, for example the way rule 98, which is the Chinese wall rule, exists today, is not actually in keeping with the times and I think there is some anticipation that there will be more interaction across different products and venues. I think that’s part of the thing that’s driving it. ... There’s other things that are in the works too."
An update: NYSE Arca traded 2.8 billion shares yesterday, a new record. ArcaBook recorded an all-time high 670 million updates. Arca processed 47.4 million orders, believed to also be a record.
For an old-timer like me, I never thought I'd see numbers like these. And for those outside of these four walls, like I said, this is all remarkable mostly for what *didn't* happen. Our goal is to be there when you need us, to get you those reports and cancels fast enough that you can do something else, put up those quotes quick enough that you can get those best prices, here or (perish the thought!) away.
That means that mandatory opening indications are not required.
Hey, if you subscribe to our System Status Notifications via RSS, you don't have to wait 'til I get around to telling you this stuff. In fact, yesterday I missed it altogether, because I was away from my desk at the time. So RSS is the way to go.
This will enable all orders to be exposed to the published quote. If you want to forward me the $127 grand, I'll be happy to test out the single-share system and report back the results.
From Tahiti.
To me, this underscores that specialists and floor brokers continue to be important parts of the NYSE market. We're investing in the trading floor, not walking away from it. Todd and Mike know the issues, and I'm confident they will help us -- and customers -- realize the full value of our trading model. Welcome to the team, guys.
"When price is an inverse function of liquidity and liquidity is an inverse function of price certainty, the recursive loop can only be broken by human intervention and action."
Testing for these system changes will be held tomorrow and a week from tomorrow.
And I learned today that an ACK has nothing to do with when you hit the wrong key and buy a million shares instead of a million dollars worth, and you say, "ACK, the head of the desk is gonna kill me!"
"We favor Linux for what we do. We don't want to be beholden to any one [hardware or software] supplier, even if it is very good. We want the freedom to be vendor-independent, so Linux was a good choice," said Rubinow.
Pisani: "Contrary to all expectations, the NYSE floor will not disappear; new investment from Lehman and one or two other firms that will buy into the renamed specialist business will stabilize the trading floor...New SEC rule changes will inject life into the specialist system at the NYSE. The long-desired changes will help the long-term viability of the specialist system, and will once again help the specialist companies regain profitability."
The start of every new quarter and every new year brings renewed hope to the financial world and...wait for it...new levels for the ol' NYSE circuit breakers. Woo-hoo!
OK, gang, work with me here. I'm trying.
Happy 2008 to all Exchanges readers out there. Recover from that eggnog hangover yet?
Me neither.
I don't know how many of you will look at this as an early Christmas present, but it's landing in your stocking this morning nonetheless -- pre-opening indications start today. Ah, the gift of transparency. Beats new socks!
Today's first hour produced NYSE volume of 903 million shares, compared with the previous record of 805 million shares.
I have no idea what he'll be asked, but recently in these sessions he has talked about what's ahead not only for the New York trading floor but for the whole NYSE Euronext enterprise.
"As we continue to successfully introduce new technology and an updated rule set for specialists with approval of the SEC, we expect the specialist role and their market making capabilities to further evolve."
"While many of the changes require Securities and Exchange Commission approval, Mr. Niederauer said he hopes they can be completed by early 2008."
"To regain lost ground, Niederauer and Leibowitz are taking steps to make the NYSE, NYSE Arca, and the organization itself more competitive."
