Tagged: NYSE Euronext

NYSE Goes Retail

The recent SEC approval of plans by the NYSE to attract retail dark liquidity generated a nationwide acronym alert.

Just kidding. Mostly. But acronyms in hordes do assault readers of the NYSE rule. It was not readily apparent that the filing had been composed in English.

If you didn’t hear, the SEC last week approved plans by the NYSE to host undisplayed orders originating from retail investors for matching against high-frequency trades in sub-penny increments.

We don’t fault the NYSE. It’s trying to compete for data revenue under plans that require it to match at least 25% of trades to earn revenue from the data those trades generate. With its share of market slipping below that level in May, the need was urgent.

But there are problems here for IR pros and public companies beyond that fact that it represents an abrupt and contradictory about-face from the SEC. We could go on for pages but because some of you would become alcoholics as a result, we’ll confine ourselves to a single, overriding flaw:

The rule effectively establishes 1,000 price points per dollar. In Regulation National Market System, Rule 612, called the Sub-Penny Rule, states: “No national securities exchange, national securities association, alternative trading system, vendor, or broker or dealer shall display, rank, or accept from any person a bid or offer, an order, or an indication of interest in any NMS stock priced in an increment smaller than $0.01 if that bid or offer, order, or indication of interest is priced equal to or greater than $1.00 per share.” (more…)

Back in Pink

You’ve asked about the Issuer Data Initiative – this effort with you to roll back the dark cloud of mystery that has fallen upon the data about your equity trading: We’re getting big helping hands. I’m in NYC this week for that reason. Hope to tell you about it next week! Make sure your company is backing the initiative.

Meanwhile, the merger battle lines pulse and writhe around Nasdaq OMX and NYSE Euronext. The drama raises a question: Which market has the highest share volume in 2011, up 10% over 2010?

If you shouted, “The Pink Sheets!” you’re correct.

We owe the tip to Tom Steinert-Threlkeld writing in the April 14 Securities Technology Monitor. Threlkeld quoted a report from SIFMA, the securities industry association. We looked it up. Fascinating stuff. Before we go Pink, some facts about the big guys:

The Nasdaq’s daily volume first surpassed the NYSE’s in 1994, with 295 million shares to the NYSE’s 291 million. The DJIA was at 834, the S&P 500 at 466 and the Nasdaq Composite at 751. (more…)

Exchanges Depend on Arbitrage

What if some mathematical calculations in the market are just there to get a reaction?

Traders have not to my knowledge named them “Charlie Sheen.” But alert reader Walt Schuplak at the Market Intelligence Group in New York sent an item about rogue algorithms. Our friend Joe Saluzzi at Themis Trading wrote on it yesterday.

Joe explains that certain trading practices create arbitrage opportunity. Profiting from divergence isn’t bad of itself, Joe notes. But if the chance to profit is fostered where divergence could not or would not occur on its own, it raises fundamental questions.

Bloomberg writer Nina Mehta wrote today about the Australian government’s initial rejection of the Singapore Exchange’s effort to buy the Oz stock market. Singapore is a shareholder-owned exchange. The Deutsche Bourse is public. Same with the InterContinental Exchange, throwing in with the Nasdaq on a bid for the NYSE, both of which are public too. The London and Toronto markets are run by public companies. BATS may IPO. (more…)

Your Volume and the Maker-Taker Model

You’ve heard the saying “six of one, half-dozen of the other?”

The DXY, the spot market for the US dollar, declined 7% in July. Stocks were up 7%. May was a good month for the DXY, which rose from 81 to 87, roughly. May crucified equities and gave us the Flash Crash on the heels of a surge in the value of the dollar.

Is it six of one, half a dozen of the other? The dollar in your pocket loses 7% of its purchasing power versus other currencies in July. Stocks appreciate 7%. Call me simple, but it seems that when a thing you buy is worth more because the thing you buy it with is worth less, that these sort of cancel each other out. (more…)