NYSE OpenBook to Launch This Month
The Exchange later this month plans to launch NYSE OpenBook, a revolutionary new product that gives market professionals access to buy and sell limit orders on the NYSE limit-order books. NYSE OpenBook lets traders see aggregate limit-order volume at every bid and offer price, thus responding to customer demand for more depth-of-market data and raising the NYSE market to an even greater level of transparency. The anticipated launch date is Jan. 24.
"NYSE OpenBook will, for the first time, enable off-floor market participants to gauge the depth of NYSE limit-order books," said NYSE Co-Chief Operating Officer Robert Britz. "It will enhance the transparency of the NYSE market in a post-decimal environment."
Since the switch to decimal prices, demand for market-depth information has surged. This is largely attributed to the fact that with liquidity spread out over 100 price points—instead of the 16 under the previous fractional-pricing system—traders and other market participants have found depth of market difficult to discern.
NYSE OpenBook is initially aimed at professional buy- and sell-side traders where demand is the strongest, said NYSE Vice President Ron Jordan. "Professional traders need to know what's above and below the best bid or offer given the impact of decimals. The size of their interest is often greater than the size at the best bid and offer."
Specialists are supportive of NYSE OpenBook, viewing it as a way to fight the perception that as the once-exclusive keepers of the limit-order books they held unique advantages. "NYSE OpenBook is an effort to advertise our liquidity," said Myles Gillespie, president of Fleet Meehan Specialist. "The NYSE is the most transparent market in the world, which is why we're the strongest. Any effort to build transparency, as is the case with NYSE OpenBook, will only strengthen our market."
NYSE OpenBook, available via an electronic data feed, is distributed to any firm or vendor wishing to carry the product. Among the current distributors are Thompson ILX, Bridge, Bloomberg and Reuters, the nation's largest market-data vendors.
"We anticipate that the demand among the universe of professional users will be high," said Thompson ILX Chairman Norman Epstein. Customers, he said, expressed interest in NYSE OpenBook almost as soon as they found out that the product was on its way to market.
"This is Release 1.0 of NYSE OpenBook," said Mr. Jordan. "We will gauge demand and look to expandand make modifications to the product down the road." For example, the Exchange may look at ways in which to combine NYSE OpenBook with other products, such as depth conditions and depth indications, which the NYSE created to improve market transparency. Other possible future adjustments include giving customers the ability to receive limit-order-book information on specific rather than all NYSE-traded securities. The NYSE will also consider targeting other segments of the market, including brokers and retail investors.
"We know there's strong demand among trading desks and derivative traders," said Mr. Jordan. "If the demand materializes in the broker or individual-investor community, we will craft products and services that appeal to those market segments."
NYSE OpenBook is the beginning of many other innovative market-data products the NYSE intends to launch. "By developing data and information products that further increase the transparency of our market, we'll make the NYSE stronger and even more attractive to investors," said Mr. Jordan.
NYSE OpenBook:
Part of the Network NYSETM Platform of Choice
NYSE OpenBook is just one of the many products delivered under Network NYSE, an extensive family of order-execution services and market-information products the Exchange introduced in October 2000.
When the Exchange launched Network NYSE, it did so with one major goal in mind: to bring customers closer to the NYSE point of sale through a combination of better information and more choices in how they accessed the NYSE market. A little more than a year later—with many Network NYSE products and services brought to market—customers are fully availing themselves of their new options.
For example, NYSE Direct+TM , the Exchange's new automatic-execution service for limit orders up to 1,099 shares, averaged a phenomenal 68,500 executions daily for the fourth quarter 2001. Since NYSE Direct+ completed its launch in April, a growing number of NYSE member firms have turned to the service that, for the first time, allows them to opt for a system-generated immediate execution at the national best bid or offer.
With each new Network NYSE product, NYSE customers will have an ever-widening array of execution choices—and more information resources. For example, an improved version of an order-execution service called XPress Order launched last month gives customers greater assurance that block orders greater than 15,000 shares are immediately executed whenever a quote is in place for at least 15 seconds.
"Our customers now have multiple options to access the point of sale and new ways to benefit from the auction market's inherent fairness, transparency and efficient price discovery," said NYSE Chairman and CEO Dick Grasso.
In addition to NYSE OpenBook, NYSE direct and indirect customers have access to a range of information resources, including, for example, NYSE MarkeTracTM—a market-information center on nyse.com. Since its launch in March, NYSE MarkeTrac has steadily gained fans among U.S. investors.
NYSE MarkeTrac lets investors peer into the NYSE market to see what's happening in the trading of stocks—all while getting a three-dimensional view of the trading floor. A low-bandwidth version of NYSE MarkeTrac—MarkeTrac Light—was added to the site in October for investors with less advanced computers.
A popular Network NYSE product on the trading floor is NYSE e-BrokerTM , a handheld device that brokers and other market professionals are finding indispensable.
"We could not conduct business effectively for our customers without e-Broker and NYSE technology," said Bob McCooey, president of the Griswold Company, a brokerage firm on the NYSE trading floor.
Since the deployment last year of a small, lightweight e-Broker, usage has climbed dramatically. In November 2001, an average of 237 brokers used e-Broker every day, executing more than 125 million shares through their devices daily. That's up significantly from November 2000, when some 140 brokers executed roughly 20 million shares a day.
Numerous other Network NYSE products are on the way. For example, a soon-to-launch order-execution service—Anonymous SuperDot—will allow member firms to entitle their institutional customers to route orders to the NYSE without having their identities revealed.
With each new Network NYSE product, customers gain more options. "Network NYSE," said Mr. Grasso, "offers a new dimension in customer choice by providing new and exciting ways for customers to access the Exchange's unparalleled liquidity and extensive information resources." |
