My day job is so busy these days.

[OFF-STAGE VOICES SHOUTING IN UNISON: “HOW BUSY IS IT?”]

So busy that yesterday, I wrote this press release about a couple of cool new data products, and until now haven’t had a chance to blog about them.

OK, I know, not funny. But it does happen to be the case. Not that I’m complaining about being busy. That’s a good problem to have. But it has kept me away from blogging. Apologies for that. Will try to do better.

Anyway.

Good stuff coming on the data front in the form of two new products, NYSE OpenBook Ultra and NYSE Order Imbalances. The former starts on Monday, June 2; the latter, Tuesday, July 1. A couple-three key points:

• NYSE OpenBook Ultra is a new version of OpenBook that will update with every single new order, with latency of less than a millisecond.

• Ultra also has a new “self-healing” format, which has nothing to do with transcendental meditation or even yoga but is a good thing nonetheless — it allows for faster and easier recovery in case you somehow miss a data message or messages.

• NYSE Order Imbalances will increase transparency by providing snapshots of order imbalances at the most critical times of the trading day: before the open and before the close. With faster and better information, you can manage your execution strategies that much better.

More details in the press release and the product pages linked above. And I’ll be posting an interview on this topic next week.

Until then, have a good weekend, my friends.

Today in NYSE History (NYSE.com):
30 May 1973 — The twenty billionth share was listed on the NYSE.

That must have been one of the few things to cheer about in the bear-market early ’70s.

A guest post from my colleague Todd Abrahall about his observing the close in AIG on Tuesday, May 13:

As a result of an index re-weighting, the published order imbalances in AIG at the 3:40 p.m. and 3:50 p.m. imbalance publication times were 3.3 million and 3.1 million shares, respectively, both on the sell side. However, after 3:50 p.m., one firm put in a large offsetting order, and that — coupled with other offsetting interest — swung the imbalance to 4 million to buy at approximately 3:54 p.m.

Because we don’t allow market-on-close interest on the same side of the last published imbalance, the only way to represent yourself on the sell side — opposite that new imbalance on the buy side — was to use a floor broker. Otherwise, you risk executing your order before the closing bell, or missing the market.

The result was that about 20 floor brokers at the AIG post at the close, representing more than 3 million shares of sell interest. They each got an execution up a dime. The last print before 4 p.m. was $39.07; the closing print was 39.16, up 0.3 percent from the previous trade. The closing print was 12 million shares; the stock’s average daily volume for the last quarter is 2.9 million shares.

Thanks, Todd. Sounds like a good example of a market that works, and of people on the trading floor adding value to customers. And thanks to our colleagues who helped us on this one by checking and adding details.

I’m going to try to post more guest blogs like this, as well as some Q&A interviews. What do you think?

Happy Monday, folks. Pete Townshend of The Who, the great songwriter and windmill guitarist, was born On This Day 63 years ago. The man who captured the moment when he wrote, “…Hope I die before I get old,” is getting there. Old, that is. But he’s still at it, and doing anything but mellowing, and I respect that. I recently caught on VH-1 a terrific documentary, “Amazing Journey: The Story of The Who,” and came away with a greater appreciation for the band and its work. As the great man said, long live rock.

Reuters ran an interesting piece on Friday, coming out of their Reuters Summit interview series:
Execs defend humans in high-tech markets. Excerpt:

The New York Stock Exchange’s landmark trading floor on Wall Street — the symbol of U.S. capitalism that is occasionally teased for its low-tech nature — received some praise from its owner and competitors alike at the Reuters Exchanges and Trading Summit in New York this week.

NYSE Euronext (NYX.N: Quote, Profile, Research) Chief Executive Officer Duncan Niederauer said the number of specialists and brokers on the floor would “probably never” dwindle to nothing, while others said recent volatility and the increasingly complex investment products hitting markets require a human touch.

“There are a lot of clients that like to use the trading floor. They like the human element of trade. They like to pick up a phone and talk with a broker and try to get some color on the market,” said Terry Duffy, executive chairman of CME Group, the world’s top futures exchange.

“And then there is obviously the rest of the world who likes to trade by electronic trading,” said Duffy….

Niederauer said the population of those connecting buyers and sellers could decline by another 20 percent by the end of the year, excluding staffers at the American Stock Exchange, which the NYSE is in the process of acquiring. [If you want to get the full context of Duncan’s comment, the audio is posted on the Reuters Summit blog.]

But he pointed to the sharp equity-market drops last summer and earlier this year as evidence the experience of human market-makers is necessary.

“When you get into volatile periods like that, people want to use the floor or they want to get human judgment involved, or they want to use the experts,” he said.

Electronic trading networks such as BIDS Trading LP, a joint venture between the NYSE and a consortium of U.S. firms, give clients the option of either negotiating their large-block orders, or matching them electronically.

“If you look at some difficult trades … where there’s something unusual happening, human intervention is invaluable,” said BIDS CEO Tim Mahoney.

“I wouldn’t discount the floor brokers, or the existence of the floor,” Mahoney said.

I find that Mahoney comment about difficult trades particularly noteworthy. To me, it signifies that brokers and specialists continue to work to add value. The humans are defending themselves, by doing what humans are supposed to do in tough situations: communicate, negotiate, assess, apply judgment and experience, figure it out, serve the customer. Duncan said elsewhere during his interview that having specialists and brokers on the trading floor gives NYSE a “lever” that other markets don’t have — a competitive edge that is particularly useful in volatile markets.

With the right technology tools and rule set, specialists and brokers could (and should) have an even greater, positive impact on the quality of the market. NYSE is putting forward new features and capabilities. It will be up to the SEC to approve them, and then, back to NYSE and members to make them work. Duncan spoke of a time frame of this autumn for this stuff to come together. It can’t happen soon enough. I’m looking forward to it.

Happy Monday, folks. Today’s historical tidbit is a good one for someone like me who grew up eating cold cereal every morning (and loving it) and never outgrew it.

Today in NYSE History
12 May 1959 –Cereal maker Kellogg Company listed on the NYSE.

Happy anninversary, Kellogg. Among my many favorites: Frosted Flakes, Corn Flakes, Rice Krsipies, Sugar Smacks (which now are “Honey Smacks”) and Sugar Pops (now just “Pops”). What were yours?

Tuesday’s conference call concerning NYSE Euronext first-quarter earnings contained a lot of good information about most every aspect of our business. Plenty to read about in the transcript about futures, options, technology solutions, whatever strikes your NYX fancy, but as the New York Stock Exchange continues to be the main topic of conversation in this space, here’s an excerpt that may interest Big Board traders.

Niamh Alexander - KBW - Analyst
Congratulations on a good quarter. I just wanted to touch on the smaller part of operating earnings, but still there’s a lot of work going on to reshape the value proposition on the floor. And on the U.S. cash equities business, can you maybe give us an update? Because I think when we last caught up with Larry, there was a lot going on, a lot of discussions with the SEC. And I
think Duncan, you recorded last night about expecting maybe the floor presence to shrink even further. So perhaps you can help me understand what’s changing here.

Duncan Niederauer - NYSE Euronext - CEO
Why don’t I start on the floor piece specifically, because I did speak to some people from Reuters yesterday, so that’s probably where that came from. And then I’ll turn it over to Larry to give some more details on actually what we have in motion with the SEC and with the various communities.

So I was asked yesterday by some in the media about what our plans for the floor were, and I will tell you a couple of things. One is, most of you know we have already consolidated into the two larger trading rooms, the so-called main room and garage. It would not surprise me, as the market model continue to evolve and we continue to embrace technology, that more of the
risk management can be done off the floor. I think that would be positive for liquidity provision, so we’re not going to resist that. Having said that, we’re not about to turn this into a remote business.

So I think when I calculated all the factors, my view was it was definitely possible that we could consolidate the existing core NYSE business in the one large trading room; that wouldn’t surprise me.

At the same time, remember that as we do the Amex transaction, we will have one of the floors reoccupied for what I would call a micro and small cap market. The stocks that are traded on the Amex now that will not transfer to New York or NYSE Arca.

And then we’ll also have — one of the smaller rooms in the back for a a footprint for a small options floor. The equity floor will probably happen late in ‘08, the options floor in early ‘09. So my guess is we will be having more people come to this building six to 12 months from now, not fewer. But I certainly could see consolidation from two rooms to one on the main NYSE business.

Larry, why don’t you take it on what we’re doing in terms of functionality and technology.

Larry Leibowitz - NYSE Euronext - Group EVP & Head of U.S. Execution & Global Technology
Sure. So I think there’s a couple of threads here. One thread is that a large amount of our cost savings come from retooling the technology that supports the floor of the New York to be more in line with what we do across the rest of the firm, and so we continue to move along that path and make significant progress. Some of that would result in cost savings. Some of it results
in performance or latency reductions to our clients, which we started to roll out with our CCG [Common Customer Gateway] platform, which had a pretty significant latency reduction for people using that. It’s somewhere around 35%.

That said, when Hybrid was put in, that was an initial response to regulation requirement to electronically link the market through the trade-through rule. What we’ve really been doing has been redefining the balance between the various constituents that represent our trading platform, whether that’s floor traders, specialists, or electronic trading. And it’s creating new value
propositions for each of those participants that helps us figure out what the right mix of each of them.

So as an example, we just announced rolling out electronic reserve on pilot stocks a couple of weeks ago. That was creating more transparency and more functionality to the electronic trading side of our constituents. We just announced I think it was yesterday that we’re going to roll that out to the rest of the stocks as of this Friday. We’re going to continue to add functionality as we evolve the platform. We’re talking to the SEC about changing the rules to make the market simpler, more conducive to electronic trading, but also allowing a role for a market maker with obligations, more of a liquidity provider as we evolve the specialist role.

And then to continue to evolve the floor traders, have more functionality that makes more sense in an electronic world. So you will see in July, for example, rolling out algorithms in the handhelds, so that floor traders will be able to work algos from the floor, but also when large block trades happen, to be there to represent the customer. That will allow our upstairs traders to not feel that they are shut out when they give a trade to the floor, that they are also foregoing the benefits of the algo trading.

So it’s a constant evolution, working aggressively on a number of paths, working with the regulators to get rules passed as quickly as possible as we change this model at a breakneck pace, still within the confines of maintaining the discipline of getting the cost out and the performance up of the underlying technology.

Those off-trading floor reserve orders Larry referenced are rolled out today, and we just posted an advisory to not use the OB (Or Better) order instruction on those orders until further notice.

Have a great weekend, my friends.

The pilot for electronic entry of Reserve Orders, which began on 23 April and was discussed here previously, will extend to all NYSE-listed securities beginning this Friday, 9 May.

From our note today to customers:

Requiring a minimum posting of 100 shares and offering the ability to enter flexible replenishment amounts, the new DOT Reserve order will give clients additional flexibility in managing their NYSE systemic order flow and accessing the Exchange’s unparalleled liquidity pool. The planned floor wide expansion will allow this useful order-flow management tool to now be used for all NYSE-listed names.

Attached within please find a link to the previously distributed Reserve order information sheet — describing the two types of Reserve Orders for electronic entry — and the technical specification document. Note, only the first type of Reserve Order is currently available; the other is to come — more information to follow.

Reserve Order Information Sheet

Technical Specification

Hope you had a good Monday. The market was nothing to write home about but surely the market was better than it was On This Day (NYTimes.com):

1893 — Panic hit the New York Stock Exchange; by year’s end, the country was in the throes of a severe depression.

The pilot for electronic entry of Reserve Orders, which began on 23 April and was discussed here previously, will extend to all NYSE-listed securities beginning this Friday, 9 May.

From our note today to customers:

Requiring a minimum posting of 100 shares and offering the ability to enter flexible replenishment amounts, the new DOT Reserve order will give clients additional flexibility in managing their NYSE systemic order flow and accessing the Exchange’s unparalleled liquidity pool. The planned floor wide expansion will allow this useful order-flow management tool to now be used for all NYSE-listed names.

Attached within please find a link to the previously distributed Reserve order information sheet — describing the two types of Reserve Orders for electronic entry — and the technical specification document. Note, only the first type of Reserve Order is currently available; the other is to come — more information to follow.

Reserve Order Information Sheet

Technical Specification

Hope you had a good Monday. The market was nothing to write home about but surely the market was better than it was On This Day (NYTimes.com):

1893 — Panic hit the New York Stock Exchange; by year’s end, the country was in the throes of a severe depression.

The pilot for electronic entry of Reserve Orders, which began on 23 April and was discussed here previously, will extend to all NYSE-listed securities beginning this Friday, 9 May.

From our note today to customers:

Requiring a minimum posting of 100 shares and offering the ability to enter flexible replenishment amounts, the new DOT Reserve order will give clients additional flexibility in managing their NYSE systemic order flow and accessing the Exchange’s unparalleled liquidity pool. The planned floor wide expansion will allow this useful order-flow management tool to now be used for all NYSE-listed names.

Attached within please find a link to the previously distributed Reserve order information sheet — describing the two types of Reserve Orders for electronic entry — and the technical specification document. Note, only the first type of Reserve Order is currently available; the other is to come — more information to follow.

Reserve Order Information Sheet

Technical Specification

Hope you had a good Monday. The market was nothing to write home about but surely the market was better than it was On This Day (NYTimes.com):

1893 — Panic hit the New York Stock Exchange; by year’s end, the country was in the throes of a severe depression.