NYSE says its costs, volatility lower than Nasdaq
Reuters, 12.04.03, 3:39 PM ET
NEW YORK, Dec 4 (Reuters) - Trading costs and volatility are lower on the New York Stock Exchange than at its largest competitor, Nasdaq Stock Market Inc. <NDAQ.QB>, according to a study released on Thursday by the Big Board.
In the study, the exchange reviewed the stocks of 39 companies that transferred to the NYSE from the Nasdaq from January 2002 to March 2003, after the advent of decimalization.
When comparing the price volatility of the stocks 60 days before and after the listing transfer, the exchange said that price volatility was reduced by half, quotes narrowed by more than a third and execution costs were halved.
"We find that -- consistent with pre-decimal, pre-ECN (electronic communication network) studies -- these stocks have shown significant reductions in price volatility and quoted spreads, improvements in the information efficiency of prices, and reductions in trading costs," NYSE Senior Vice President and Chief Economist Paul Bennett said in a statement.
"The improvements seem to stem from consolidated order flow, which supports the notion that the centralized NYSE auction market provides the best market for companies, thereby ultimately benefiting investors."
The report appeared designed to counter recent criticism over the NYSE's specialist firms, which buy and sell stocks in order to reduce volatility.
The specialists are being investigated by the NYSE and the Securities and Exchange Commission for improper trading practices. Some of the firms' critics contend that in a world of electronic-based trading, the specialist system has outlived its usefulness and should be eliminated.
Some market observers -- most notably those associated with electronic trading platforms -- have also said the specialist system shields the NYSE from competition.
Copyright 2003, Reuters News Service |
