NYSE Stocks To Begin Trading Electronically In October
08/15/06
Wall Street Letter
The New York Stock Exchange will begin executing most of the stocks listed there electronically in the first week of October, NYSE officials said. The exchange is on schedule to meet the set date, dissipating discussions on the floor that hybrid would be delayed (WSL, 3/31). "Despite the problems and the constant changes, NYSE seems to be nearing the final leg of the race," one trader said.
There are some major adjustments that have to happen first, though. For instance, the exchange is in the process of revamping its liquidity replenishment points, which are pre-programmed periods in the trading day when the market reverts to manual mode so specialists could stabilize prices. Traders have objected to the LRPs because they were too frequent and slowed down trading too much. NYSE officials promise a new plan by fall.
Currently, only one stock, Lucent, trades electronically without size restrictions. Its volume has somewhat picked up since it started trading electronically in May. Ironically, the nearly $500 a share stock of Chicago Mercantile Exchange, the fully-electronic futures trading powerhouse, won't be traded electronically. NYSE and the Securities and Exchange Commission decided that stocks that cost over $300 a share are too thinly traded for smooth electronic executions. CME on average trades a little over 600,000 shares daily, versus 2.8 million shares NYSE Group trades daily. Eight other stocks won't be eligible for electronic executions either. |
