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Q: NYSE Hybrid Market Initiative ( Answered,   0 Comments )
Subject: NYSE Hybrid Market Initiative
Category: Business and Money > Finance
Asked by: hughesjj-ga
List Price: $50.00
Posted: 03 Oct 2005 10:02 PDT
Expires: 02 Nov 2005 09:02 PST
Question ID: 575808
I am looking for information and popular press and magazine articles
about the "Hypbrid Market" being planned for implementation by the New
York Stock Exchange.  I have carefully reviewed the NYSE site, and I
have all of the information available from the NYSE. I am looking to
learn about this initiative from articles by parties other than the
NYSE so I can review it in context with what the NYSE is publishing. 
Please provide me with whatever substantive articles and other
materials are available regarding the NYSE Hypbrid Market.
Subject: Re: NYSE Hybrid Market Initiative
Answered By: pafalafa-ga on 03 Oct 2005 12:53 PDT

There's certainly no shortage of commentary on the hybrid market.

I've selected among the myriad offerings to provide both the most
recent information, as well as a selection of older, in-depth coverage
from a variety of viewpoints.  I've included excerpts from the various
sources to give you the flavor of their coverage.

I trust the information below fully meets your needs.

However, please don't rate this answer until you have everything you
need.  If there's anything more I can do for you, just post a Request
for Clarification, and I'm happy to assist you further.


Traders Magazine

Vanguard & NYSE Advisory Group Question the Big Board's Latest Hybrid Proposal 

...The Vanguard Group is the latest critic of the fifth amendment of
the New York Stock Exchange's hybrid market plan, a plan that may be
recast after an NYSE advisory committee of buyside traders recently
raised objections.

...Meanwhile, Vanguard officials complain that the way specialists
would be able to use algorithms under the fifth amendment is "unfair"
to other market participants, who would be forced to use specialists
without cause.

Traders Magazine 

A Familiar Road 

In this month's cover story, incoming STA Chairman Bill Yancey points
out how increased electronic trading intelligence allows for the
largest stocks to trade in the same way, whether they are listed on
Nasdaq or the NYSE. Within five years, Yancey continues, it will be
"difficult to distinguish listed and Nasdaq markets when it comes to
quoting and execution efficiency."

...The NYSE's hybrid market model is what may actually separate the
two main markets. Many believe a successful hybrid will dictate how
the secondary stocks will trade, as well as special situations that
might require a crowd. Without a successful hybrid market model, it
would be fair to say that there would be little difference between the
NYSE and Nasdaq.


Volume of NYSE-listed stocks to jump -- strategist
Sep 13, 2005 

...Trading volume of New York Stock Exchange-listed stocks could jump
in the next couple of years as new regulatory measures and increased
electronic advances by the NYSE spur new electronic players into the

...the consolidated volume of NYSE listed stocks -- trading across all
markets -- could go to more than 3 billion shares a day.

...the gain in volume would come about a year after the introduction
of new regulatory measure Reg NMS, and the NYSE's hybrid market,
scheduled to be complete in the second quarter of 2006.

...The NYSE, which in April said it planned to buy electronic rival
Archipelago Holdings (AX.P: Quote, Profile, Research), is creating a
hybrid market by augmenting its system of traders on the stock
exchange floor with more electronic trading


ICI President Urges Securities Markets to Maintain Focus on Protecting
Investor Interests
September 22

..."Market structure reforms have a significant impact on funds and
other institutional investors: greater efficiencies in the markets
result in lower costs and better execution for funds, and hence for
their shareholders. Our goal is to ensure that our markets are highly
competitive while facilitating the efficient execution of investor
orders," Stevens said.

...Stevens described recent developments in the securities markets as
important steps toward achieving that goal. He cited the Institute's
support of the adoption of Regulation NMS, which enables increased
automation of order execution and increased interaction of investor
orders. "We called it as we saw it -- but our position was not popular
in many circles," he said. Stevens also pointed to the NYSE plan to
restructure itself as a "hybrid" market, which incorporates elements
of a traditional auction market with those of an electronic market.
"The NYSE's proposal is an important step in implementing much needed
automation on the Exchange and facilitating more efficient trading of
listed securities," he said.

Financial Review

NYSE's Big Board faces a bigger threat: Nasdaq

...The New York Stock Exchange's share of buying and selling in Big
Board-listed companies may drop to 50 per cent during the next six
years as new regulations spur electronic trading, according to the
Nasdaq stockmarket's chief information officer, Steven Randich.

...Mr Randich's prediction highlights how competition for trading
commissions will intensify as the standards take effect next year. To
comply with the SEC rules, the Big Board will introduce a so-called
"hybrid market" in which more orders are executed automatically,
without the intervention of a specialist on the exchange floor.

..."Electronic trading venues are coming up fast and furious, and
Regulation NMS is going to accelerate that trend," Mr Randich said.
"It's almost like a dam ready to burst."

Traders Magazine

Much-Criticized ITS Rides into the Sunset  

...The ITS is on life support. The nation's stock markets, in the wake
of Reg NMS, intend to scrap the nearly 30-year old Intermarket Trading
System (ITS). In its place, they plan to use proprietary networks or
contract with independent vendors to handle order routing in
exchange-listed securities.

...The nine members of the ITS may or may not agree to participate in
a temporary consortium-based network -- a sort of ITS II
-- as an intermediary step to fully private networks.

..."Our merger with Archipelago will facilitate our use of their
routing technology," Bob McSweeney, the New York Stock Exchange
official in charge of competitive position, told Traders Magazine.
"Our objective is to expedite our exit from the ITS Plan as soon as

The Australian

Nifty Nasdaq challenges the NYSE
September 01, 2005

...The present round of mergers and acquisitions among US stock
exchanges is spurred by a new set of trading rules, known as Reg.NMS,
which will be enforced in the US next year.

...The rules call for open and transparent access to all markets to
make sure that customers get the best price in the shortest time. The
rules are expected to revolutionise US exchanges to such an extent
that the New York Stock Exchange's 213-year dominance is threatened.

Aug 31, 2005

Nasdaq official sees fall in NYSE market share

..."The same regulatory environment is now being extended to the
NYSE," said Randich. "If you were to draw a parallel, one would argue
that NYSE market share" of NYSE-listed stocks has the potential of
going from 80 percent to 50 percent.

..."I'm certain that's one of the reasons why they took an interest in
the Archipelago exchange," said Randich, speaking on the sidelines of
a Gartner financial services technology summit late on Tuesday.

...Randich added that competition was "extreme and there aren't any loyalties."

...In April the NYSE said it planned to buy electronic rival Archipelago Holdings 

...The plan allows for the NYSE to create a hybrid market by
augmenting its system of traders on the stock exchange floor with more
electronic trading.

July 20, 2005
Security Industry Association's comments to the SEC on the Hybrid Market

[comment letter to the SEC, but no excerpts provided]


SIA calls for greater clarity on Nyse hybrid market

...US trade group, the Securities Industry Association, has criticised
proposals by the New York Stock Exchange to create a hybrid electronic
market, saying that the plans are "incomplete" and lack "important
details and concrete examples of how the system will operate".

Investment Company Institute

...comment on the New York Stock Exchange's proposal to enhance its
Direct+ system in order to create a hybrid market

Securities Regulation & Law Report
April 25, 2004

NYSE's Thain Tells SEC Hybrid Market Will Be Reality Within 'a Matter of Months'

...New York Stock Exchange Chief Executive Officer John Thain told the
Securities and Exchange Commission at an April 21 hearing on market
structure proposals in New York that the exchange will be "up and
running" as a hybrid market, with full automatic execution capability,
within "a matter of months."

...The Big Board is playing a sort of "catch up" to achieve the
ability to execute customer orders on a wholly electronic basis,
without the human intervention that is characteristic of its
traditional auction process. In this case, a hybrid market is one that
permits the execution of orders either completely by computerized
systems or through the auction process.

Wall Street & Technology 
January 05, 2005

Hybrid Markets: A Migration to the Screen

...With market regulation in flux, all eyes are on the New York Stock
Exchange as it awaits approval from the U.S. Securities and Exchange
Commission for its hybrid-market proposal. This proposal is a bold
plan to overhaul the NYSE's traditional floor-based auction-model with
a turbo-charged automated trading system.

...The NYSE's hybrid plan is designed to blend the strengths of its
traditional auction model with the speed of electronic trading by
preserving a role for specialists and floor brokers to interact with
the electronic platform.

Wall Street & Technology 
October 22, 2004

Hybrid Market, Myriad Challenges 

...Chief Technology Officer Roger Burkhardt has the unenviable task of
automating the New York Stock Exchange and putting it on a level
playing field with electronic competitors by creating a hybrid market.
The caveat is that Burkhardt must do it while preserving a key
differentiator from electronic exchanges - the NYSE's floor brokers
and specialists, who play an important role in stabilizing volatility
and order imbalances during tumultuous markets.

...NYSE CEO John Thain, who filed his plan to create a blended
electronic and floor-based auction market in August, is driving the
move. It's Burkhardt's job to build an infrastructure that can handle
the unpredictable volume that results and help floor brokers adopt the
hand-held technology they'll need to interact with the automated


...Earlier this year, the New York Stock Exchange (.NYSE. or
.Exchange.) submitted a rule filing to the SEC (the .Filing.)
proposing rules and rule changes that are intended to establish a
.hybrid. market structure that blends the Exchange.s
automatic execution system, NYSE DIRECT+ (.Direct+.) with its floor auction.

...The proposed hybrid market is intended to make .speed and execution
certainty available to a wider variety of orders. and
.provide an opportunity for price improvement [in an auction market
environment] for those who desire it..

...This Client Alert updates our August 27 Client Alert on the first
Filing and provides an overview of the primary features of the
Exchange.s complex proposal.


NYSE Hybrid Market Initiative

...On August 2, the NYSE filed with the SEC a notice of its intention
to expand its NYSE Direct+ System, an automated trading system that
currently accounts for over 10% of NYSE trading volume. At the same
time, the NYSE will retain its agency auction model-otherwise known as
the specialist model. The idea is to create a hybrid market with
elements of the old specialist system combined with electronic trading
similar to that offered by the NASDAQ system.

...But there are several "Catches"

...Some form of the Trade Through Rule still applies

...the NYSE could be deemed to be a "fast" (read automated) market

...Market orders that are not marked for automatic execution will be
executed in the auction market.

..."Liquidity Replenishment Points" (LRPs) will be established to
reduce price volatility.


...Well, it's been a while since our last email missive, and there are
a lot of new market structure
developments to discuss. In mid-November, the NYSE released the second
amendment to its
original hybrid market proposal, which aimed to eliminate many of
today's current restrictions on
Direct + and thereby enhance auto-ex opportunities on the Exchange,
while at the same time
preserving the benefits of the traditional floor-based auction. Then,
a little over a month later, the
SEC voted to re-propose Reg NMS with significant potential changes,
most notably seeking
comment on two alternatives to trade-through protection, the first
providing for top-of-book
protection (i.e. only for the best bid and best offer) as had been
previously discussed and the
second going much further and extending trade-through protection to
the entire depth-of-book.


Again, let me know if there's anything more you need on this.


search strategy -- Searched Google and Google News for:

nyse "hybrid market" OR "reg nms" OR regulation nms" 

nyse "hybrid market" OR "reg nms" OR regulation nms" intitle:hybrid
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