Here is the media coverage to date from our announcement earlier this week about NYSE Arca’s new initiative to provide clients with routing to a pool or “cloud” of undisplayed liquidity from diverse sources.

Cloud is not the official name, and in fact the initiative doesn’t really have a name, but I like the word because in this case, it fits. Orders that don’t get matched within NYSE Arca are routed through this cloud of dark indications on their way to going out to another market. If they find a match in the cloud, they save time in terms of latency and have an opportunity to get price improvement. They also have a better opportunity to get filled. So in terms of liquidity, I hope this dark cloud is a rainmaker for you.

Forgive me.

Anyway, this is new for us, so I offer up these clips in case you want to read more on it. No PR guy worth his salt should ever admit to a favorite article or reporter, but I have to confess, the competitive part of me (OK, all of me) is a little partial toward the headline on the first piece.

Arca Beats Nasdaq to Dark Pools (TradersMagazine.com) — Excerpt: “According to [Senior VP Christine] Sandler, the benefit for customers is additional liquidity, better prices and a method of getting around the fragmentation of non-displayed flow that could cause firms to miss liquidity in the market. She noted that the electronic cloud could provide customers with additional liquidity beyond what is displayed or available in the markets, or additional liquidity priced better than the NBBO.”

NYSE Arca Will Connect to Brokers’ `Dark Pools’ to Cut Costs (Bloomberg.com; no link available) Excerpt: “‘It was our preference to route out to a network of our clients,’ Christine Sandler, NYSE Euronext’s head of North American sales, said in an interview. ‘And this gives our clients the ability to access additional points of liquidity.’”

NYSE Arca Routes to Dark Liquidity Pools (SecuritiesIndustryNews.com) Excerpt — “[Sang]
Lee likened the strategy to that of Archipelago…’in which advance order-routing capability to other ECNs played a crucial role in increasing its overall internal matching rates.’ The NYSE Arca service will play ‘gatekeeper to other liquidity pools and, if done correctly, should help Arca attract additional order flow,’ he added.”

NYSE Euronext launches link to dark pools (FinancialNewsOnline.com) Excerpt: “The launch came a week after a market research report said the proliferation of US trading systems has created demand for better access to trading venues.”

A rough week in the market, but at least it’s over. Until Monday, that is. Try to have a good weekend.

On the lighter side: American railroad engineer Casey Jones (1863-1900) was born On This Day (NYTimes.com) . And I always thought he was just a song character invented by the Grateful Dead! Silly me.

NYSE MatchPoint is drawing near to the day when we’ll drop the flag for the first matching session — the after-hours match at 4:45 pm Eastern.

In January, we received SEC approval and rolled our platform into production. Since that time, we’ve been working feverishly to authorize and connect the backlog of NYSE members into MatchPoint. Every NYSE member firm and every major OMS/EMS vendor are engaged with MatchPoint in some form or fashion.

Building liquidity in a dark pool requires patience, focus, persistence, skill and a critical mass of participants. As NYSE MatchPoint gets all of its NYSE members (and their customers) connected, expect to begin seeing volume. Executions will print with an “N” and an “X” modifier to identify them as MatchPoint trades. Transparency where it is needed (post-trade) and anonymity where it is not (pre-trade).

If you are concerned about information leakage, execution control, block liquidity, and finding a truly natural contraside, NYSE MatchPoint’s exchange neutral, low cost and centralized trading environment is your perfect solution.

NYSE MatchPoint is drawing near to the day when we’ll drop the flag for the first matching session — the after-hours match at 4:45 pm Eastern.

In January, we received SEC approval and rolled our platform into production. Since that time, we’ve been working feverishly to authorize and connect the backlog of NYSE members into MatchPoint. Every NYSE member firm and every major OMS/EMS vendor are engaged with MatchPoint in some form or fashion.

Building liquidity in a dark pool requires patience, focus, persistence, skill and a critical mass of participants. As NYSE MatchPoint gets all of its NYSE members (and their customers) connected, expect to begin seeing volume. Executions will print with an “N” and an “X” modifier to identify them as MatchPoint trades. Transparency where it is needed (post-trade) and anonymity where it is not (pre-trade).

If you are concerned about information leakage, execution control, block liquidity, and finding a truly natural contraside, NYSE MatchPoint’s exchange neutral, low cost and centralized trading environment is your perfect solution.

From an NYSE Euronext press release just out:

NYSE Euronext (NYSE Euronext: NYX) today announced that NYSE Arca launched a routing and price improvement service that is the first of its kind from an exchange: offering clients access to non-displayed liquidity. Through the addition of routing to participating broker-dealers and Alternative Trading Systems (ATSs), investors now have unprecedented access to non-displayed quotes and the industry’s largest aggregation of liquidity by an exchange.

Trading interest from these venues will be included in the NYSE Arca routing algorithm, providing customers with a variety of benefits, including:
• Increased potential for filling orders;
• Potential for price improvement;
• Extraordinary access to liquidity with 29 confirmed participants, comprising the largest collection of non-displayed liquidity pools available in the market;
• Access to 3 1/2 times the number of routing destinations offered by the nearest competitor.

“Providing easy and efficient access to these diverse, non-displayed liquidity venues is an extension of our commitment to offer the greatest array of services to our clients,” said Lawrence Leibowitz, Group Executive Vice President and Head of U.S. Markets and Global Technology, NYSE Euronext. “By linking more market participants than any other exchange, we are reducing fragmentation and offering our clients greater speed, better prices and equality of access to liquidity.”

Happy Wednesday, folks. Sorry the posting here has been so sparse lately; day job has had me jammed with things like the above announcement, which I hope is good news for those of you struggling with fragmentation. Hope to get back to more frequent posting very soon.

In the meantime…

Today in NYSE History
12 March 1825 — The NYSE rented a room to conduct its daily trading sessions from Mr. John Warren, a member of the Exchange.

BlueNext sees first phase two carbon trade (Reuters.com) — I keep meaning to find out more about this, as I remain interested in how our ability to convene markets can actually reduce pollution. I’ll get to it one of these days. In the meantime, here’s the latest, via a Reuters report (excerpt):

The first spot transaction of EU allowances for phase two of the EU Emissions Trading Scheme was conducted on BlueNext on Friday, the exchange said in a statement.

The trade was concluded at 21.10 euros per tonne for a total volume of 1,000 tonnes of carbon, it said.

The counter-parties of the trade were Electrabel and STX Services, the carbon rights exchange said. . . .

Exchange operators are eyeing a piece of the global carbon trading market as governments and industry step up efforts to reduce pollution.

Boston-based research firm Celent expects the carbon trading market to be worth more than 40 billion euros by 2012, up from 22 billion euros in 2006.

Hope you’re having a groovy Tuesday, downer market notwithstanding.

Financial Flashback (WSJ.com)
March 4, 1998 — Have stock investors gone crazy? Less than four months after October’s precipitous plunge in stock prices, culminating in the largest-ever point decline in the Dow on Oct. 27, stocks have rocketed to a string of records.

Hey, it’s also Knute Rockne’s birthday (1888-1931). The great football player and coach was famous for revolutionizing the game, and for talking about it. Some quotes from the official Rockne Web site (the best known is the first; my favorite is the last):

“Let’s win one for the Gipper.”

“Build up your weaknesses until they become your strong points.”

“No star playing, just football.”

“One man practicing sportsmanship is far better than fifty preaching it.”

“Show me a good and gracious loser and I’ll show you a failure.”

“Win or lose, do it fairly.”

“The best thing I ever learned in life was that things have to be worked for. A lot of people seem to think there is some sort of magic in making a winning football team. There isn’t, but there’s plenty of work.”

“I’ve found that prayers work best when you have big players.”

Just came from a meeting where some NYSE managers were saying that not all the floor brokers were aware of the pricing change we announced on Friday, which I blogged about here.

What? People aren’t reading my stuff? Heresy! I mean, WTH? (That’s what the heck — after all, this is a family blog.)

My feelings are so hurt.

OK, I’m over it. Maybe this is what happens when you announce something on a Friday: it gets lost amid the weekend anticipation. Or maybe I haven’t been posting frequently enough, and people are falling out of the habit. Anyway, this post is a reminder.

And while we’re on the topics of reminders and missed information, don’t forget, it’s easy to subscribe to Exchanges via e-mail or RSS.

Friday’s post did draw a comment and a question, which I replay here to let you know that at least someone is reading (sniff-sniff!).

Ray, can you clarify…will the floor brokers receive a rebate only if their orders are posted in the Open Book? Are they able to have reserve size and still receive the rebate? Thanks

by Ron on February 29, 2008 5:58 PM

Good Stuff Ray, about time the NYSE starts taking care of thier own. Maybe now we can start getting more liquidity in the stocks which would make a better overall trading market. Next we need the specialists to step up the level of price improvement & matching and you will see the NYSE market share start to gain ground again. I would really love the NYSE to once again become the premier exchange for traders like it used to be. Keep it coming Ray your customers have been waiting a long time for positive changes. Take care.

by tony dey on February 29, 2008 7:41 PM

Tony — Thanks for the comment. We do indeed plan to keep it coming. More to follow soon.

Ron — Brokers will receive the credit if their orders are posted on the Display Book, the book of pending limit orders. And yes, they can be reserve orders.

Important to note that not everything in the Display Book is visible on OpenBook. For example, brokers can gain the credit by posting an e-Quote, and these are not visible on OpenBook. Hope that answers it. Thanks for writing!

by Ray Pellecchia on March 3, 2008 9:07 AM

Happy Monday, folks. Hope your outlook is as sunny as today is in New York.

Financial Flashback (WSJ.com)
March 3, 1997 — Merrill Lynch & Co., after insisting that its clients weren’t interested in on-line trading, is expected to offer the service to its clients by the middle of next year. Big full-service brokerage firms have resisted the move toward on-line trading.

And hey, Alexander Graham Bell was born On This Day in 1847(NYTimes.com). Call someone you love today, and thank Mr. Bell for making it so easy.