NYSE Chief Considers Change to Electronic Trading System
Friday, January 30, 2004 03:46 AM ET Printer-friendly version
NEW YORK -- Two weeks into his tenure as chief executive of the New York Stock Exchange, John Thain is considering making a big leap into the realm of electronic trading, Friday's Wall Street Journal reported.
The move would represent a significant shift for the 211-year-old Big Board, the last remaining major stock exchange that has humans on the floor handling most trading, albeit with numerous computers to assist them. It would also underscore that Mr. Thain, a former Goldman Sachs Group Inc. (GS, news) executive, is wasting no time shaking up the exchange.
The move comes as institutional investors have become increasingly critical of the Big Board's open-auction system, saying it is slow-moving and inefficient. The Big Board's specialist firms - which oversee the buying and selling of specific NYSE shares through live auctions with brokers in a crowd - are also under investigation for alleged trading abuses that may have shortchanged investors.
The proposal under consideration by Mr. Thain would be to use an electronic system to automatically match investors' stock orders that represent the best prices to buy and sell shares at a given time, according a senior specialist and other people familiar with the proposal. Such a system would enhance the floor's current trading technology, which permits the automatic execution of small stock orders but leaves the large ones to individual specialists.
Mr. Fagenson and others say the plan is still in its early stages. But the change is being embraced by mutual-fund firms, some of whose representatives met in New York with the Big Board's five major specialist firms last week to air their concerns about the exchange's trading model. The group included representatives from the Investment Company Institute, the mutual-fund-industry trade group; mutual-fund firm Vanguard Group Inc. ; and securities firm Morgan Stanley (MWD, news), according to Mr. Fagenson, who attended the meeting, and others who were there.
A spokesman for the NYSE had no comment. Representatives of the Investment Company Institute, Vanguard and Morgan Stanley didn't return calls.
Wall Street Journal Staff Reporters Kate Kelly and Susanne Craig contributed to this article
Dow Jones Newswires
01-30-04 0346ET
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