Ameritrade, Bloomberg Unit Criticize NYSE 'Hybrid' Plan
Monday September 27, 7:12 PM EDT
NEW YORK (Dow Jones)--A large online brokerage firm and a unit of Bloomberg LP were among the market players that recently criticized the New York Stock Exchange's "hybrid market" plan.
In a comment letter sent last week to the Securities and Exchange Commission, Ameritrade Holding Corp. (AMTD) said the NYSE's proposal to expand its electronic-trading system, DirectPlus, is "a step in the right direction." But Ameritrade, like some other interested parties, said it wanted more from the Big Board.
"Ameritrade generally believes that the NYSE proposal must go further in providing investors the ability to obtain automated executions at the price quoted," the Omaha, Neb., firm's general counsel, Ellen L.S. Koplow, said in the letter. "In addition, Ameritrade believes (the) NYSE's proposal lacks the necessary specificity required to give a reader a full understanding of how Direct+ would operate."
The remarks echo similar comments made on DirectPlus by other critics, such as Fidelity Investments and the mutual-fund industry's trade group, the Investment Company Institute. The NYSE is billing the enhancements to DirectPlus (which in its current form now handles only a small slice of the exchange's trading) as leading to a hybrid system that would combine automatic executions of orders to buy and sell stock with the more-traditional services of the human traders and brokers on the NYSE trading floor.
The NYSE is pitching its plan, which needs SEC approval, as the agency considers broader market-structure reforms. Comments on the NYSE plan to the SEC were due on Sept. 22.
But although the NYSE's proposed changes represent an attempt by the 212-year- old exchange to make itself faster, they haven't satisfied every critic or rival. Bloomberg Tradebook, which provides trading services, said in a comment letter that it commended the NYSE's efforts, but that they fall short. "Much is left to the imagination as to exactly how the hybrid market will work," said Kim Bang, Bloomberg Tradebook's chief executive.
A Big Board spokesman, Ray Pellecchia, wouldn't respond specifically to any individual comment letter, but said the exchange would consider all comments and respond to the SEC as appropriate.
Although the NYSE proposal has stoked concerns in some quarters about the future of the trading floor, Bloomberg Tradebook voiced the opposite worry.
"While we note that the NYSE proposal is unclear in many respects, there is enough there to justify a real fear that the proposal is designed to preserve and protect the floor's prerogatives, at the expense of the investing public," Bang said. "Several aspects of it appear designed to avoid any true inter-market competition, to permit specialists to trade through superior prices on other markets and to give preferential treatment to hidden orders emanating from specialists and floor brokers."
Ameritrade said it wanted to see more automation of trading. "The NYSE proposal should provide for truly automated trading 100% of the time," Koplow said. Also, she added, "there is a lack of specificity concerning the automation; for example, how long will it take for an immediate or cancel notification to be sent back to the firm or market center routing the order?"
-By Gaston F. Ceron, Dow Jones Newswires; 201-938-5234; gaston.ceron@ dowjones.com |
