Good things are happening for brokers on the NYSE trading floor, and their customers. Below is a news release we just issued about a couple of important new tools. I’ll try to come back to this subject soon with an interview or two.

NYSE Floor Brokers Get New Tools to Trade Algorithmically and Locate Deep Liquidity
– Combination of High-Tech and High-Touch Benefits Brokers’ Customers –

The New York Stock Exchange, a subsidiary of NYSE Euronext (NYX), is rolling out two new technologies that, respectively, give brokers on the NYSE trading floor the ability to trade algorithmically, and strengthen the brokers’ ability to locate large sources of liquidity.

“NYSE floor brokers continue to be an important resource for their customers,” said Michael Rutigliano, Vice President-Broker Liaison. “These new tools will enable brokers to seamlessly blend from their hand-held devices, the high-tech functionality of speed, automation and anonymity, with the high-touch benefits of discovery, price improvement and accessing block-sized liquidity.”

The NYSE last week began introducing algorithmic trading capabilities for floor brokers, and last month rolled out BlockTalk(SM), which assists brokers with finding the “contra side” for block-sized orders.

Offering NYSE Customers the Competitive Benefits of Algorithmic Speed and Strategies

In the coming weeks, the NYSE will gradually roll out new, algorithmic trading capabilities for floor brokers. Brokers will have the ability to route all or part of a customer order to an external algo engine directly from their hand-held order-management device. In collaboration with floor brokers, Pragma Financial Systems has engineered and provides a suite of sophisticated, high-performance algorithmic strategies designed specifically for the NYSE point of sale.

“We are happy to have the opportunity to partner with the NYSE, and to provide its floor brokers with execution algorithms,” said David Mechner, president at Pragma Financial Systems. “We worked closely with NYSE to customize our platform to meet the needs of the floor broker community, and I think we’ve succeeded in developing a unique offering that will provide tremendous value for its users.”

All algo strategies will trade on parity, providing the ability to match on every trade. The algos are customizable and enable brokers to use their current execution and quoting strategies simultaneously. All strategies will compete with and are benchmarked to the National Best Bid and Offer and are Regulation NMS compliant.

The ease of functionality and speed of strategy delivery complement the sophistication and competitive capabilities of the algorithms. The result is a high-tech, high-touch combination of a robust, high-performance platform, coupled with the insight, accountability and value difference only a floor broker can provide.

Increasing the NYSE‘s Leadership in Block Trading

Last month the NYSE introduced BlockTalk(SM) to the floor broker community. Designed and developed by Micro Design Services, LLC in cooperation with floor brokers, this real-time messaging system is a new technology feature on the brokers’ hand-held order-management devices that enables floor brokers to discreetly search for deep liquidity by broadcasting and subscribing to specific stocks in which they have large interest. These broker interest alert messages contain no specific order information so customers may benefit from a discovery process in a safe environment free of price impact, information leakage or intermediation.

“We are very pleased to be able to work closely with the NYSE and the floor community in providing tools that improve block trading in today’s overly fragmented market. BlockTalk will benefit traders by leveraging the intrinsic benefits of the negotiation model,” said John Petschauer, CEO of MDS.

With every floor broker currently enabled to use BlockTalk, approximately 350 broker hand-held devices are electronically “listening” for broker interest alerts. Customers have already benefited from this newfound ability to locate and access block liquidity that is not accessible electronically.

Use of BlockTalk is helping the NYSE extend its leadership in the execution of block-sized trades. In June, the NYSE executed 502 million shares daily in client buy and sell blocks, representing 17 percent of NYSE volume and 13 times Nasdaq’s block volume in NYSE-listed issues. The average order size on an NYSE floor broker’s hand-held device was approximately 30,000 shares. In June, 95 NYSE stocks had 40 percent or more of their volume in block trades, and an additional 188 had 30 percent or more.

I don’t usually run entire news releases, but I thought that any part of that one might be of interest.

Happy Monday, folks. Today is the birthday of the inventor of Tupperware, Earl Tupper (1907-1983), according to NYTimes.com. Stupid me, I always thought Tupperware was just a memorable name, or that they named it after the “tup” sound that the containers kind of make when you open and close them. Of course, I’m proud to say that Tupperware Brands Corp. is listed on NYSE, and the symbol is, of course, TUP. Happy birthday, Mr. Tupper.

“My decoder ring!” From “A Christmas Story,” Photo: NPR.org

I really hadn’t planned to trot out my Nasdaq Decoder Ring so soon after its first use. I don’t want to get like Nasdaq and start talking about the other guy’s market more than I do my own. But I got this question this morning in response to the debut post:

Question: Are the market share losses and now Nasdaq actually trading more NYSE shares than NYSE does a publicity stunt too? — Mark

Mark — Thanks for writing. The decline in our share of trading is real. I’ve written here among other places about things we’re doing to provide even higher market quality and thus strengthen our competitive position.

On Nasdaq trading more NYSE shares than NYSE does, this claim is based on last Friday’s trading. Here are the numbers. Please forgive my crude table; had some trouble inserting a chart.

Tape A (NYSE-Listed) Trading on 11 July, 2008

____________________Full Day_________Regular Hours (9:30 to 4:05pm)
NYSE________________1,727,003,577____1,727,003,577
NYSE Arca___________ 1,093,206,070____1,060,418,594
NYSE Group__________2,820,209,647____2,787,422,171
NYSE Group + CS2 ____ 2,867,187,582
CS2_________________ __46,977,935

Nasdaq______________1,730,218,818____1,700,024,282

Now if you take Nasdaq’s claim to have beaten us and pass it through the decoder ring, applying a bit of lemon juice, you’ll discern:

1) The claim excludes our after-hours Crossing Session 2, but includes Nasdaq’s after-regular-hours trading. Including ours puts us on top. Why exclude our after-hours volume but not theirs? Apples and oranges.

2) The claim excludes trading on Arca — which does happen under the NYSE Euronext umbrella — but aggregates trading on all of the platforms Nasdaq has bought up over the years. If your compare our U.S. markets vs. theirs, we’re still almost twice theirs. Again, apples and oranges.

3) The claim excludes our trading in some issues that closed a little after the usual 4:00-4:05 p.m. Include them, and our volume is greater than theirs.

To boot, Nasdaq’s press release conveniently doesn’t mention its own rapidly slipping share of its own listed trading. A little selective in your reporting, Nasdaq, no?

I’m off this week, so posting here will be on the light side. But let’s keep it real out there, or I’ll have to lend the ring to a colleague.

Bobby Murcer with his wife Kay (Photo: amNewYork.com)

I went to a gathering at a neighbor’s house yesterday afternoon and missed the end of the Yankee game. When I got home I went online to see how the game finished up, and saw the news that Bobby Murcer had died. My sincere prayers and condolences go out to his family and friends.

Bobby was my boyhood idol when he was a player and my touchstone to Yankee tradition and class when he was a broadcaster. I had the privilege to meet him once, when he brought some of his childhood friends from Oklahoma to visit NYSE, as recounted in this post. I had the honor of meeting them at the door, and I remember being completely awestruck when I shook his hand. “Nice to meet you, Mr. Murcer,” was all I could stammer out. “Please, just call me Bobby,” he said with a big smile, instantly putting me at ease. I think his real greatness was in exactly that regular-guy connection he had with people.

Not that he hadn’t done great things in his career. For years and years he was an excellent player, the best guy on Yankee teams that otherwise were anything but excellent. He was exciting to watch — fast as a colt, good power, sure center fielder. He was an All-Star in both leagues, once hit .331, hit 252 lifetime homers, and once hit four consecutive homers over the course of a double-header I remember listening to on a little transistor radio.

And of course, there was 6 Aug. 1979, the day of the funeral of his friend and Yankee captain Thurman Munson, who had died when his small plane crashed. The entire team attended the service, where Lou Piniella and Bobby gave eulogies, then flew back to New York to play Baltimore that night. Bobby hit a three-run homer and a walkoff, two-run single in the ninth inning to knock in all five runs in a 5-4 comeback win. What accounts for the ability to do such things in such situations, I wonder — adrenaline? Luck? God? All I know is that it was something special, and it always shone around Bobby Murcer.

The day he was at NYSE, Gordon Charlop, one of our brokers, walked Bobby and his friends around the trading floor. People stopped what they were doing to come over and talk with him. They got his autograph, they asked him how the Scooter was doing, what did he think of the Yanks’ chances for the playoffs, did he remember the time when this or that happened. More frequently than anything else, I heard people thank him, for being a player and announcer they enjoyed, for always conducting himself well. Bobby was a modest man and could tell he appreciated the outpouring of affection.

The following Christmas Eve we read the news that Bobby had brain cancer. Ever since, we have followed his battle with the disease. His comeback to the Stadium after his surgery. His stated goal of being at Opening Day at the new Stadium next year (I’m sure he indeed will be there). And most notably, the news reports of his trading letters and phone calls with others battling cancer, sharing his experiences, affirming theirs, gently urging them to have faith and hope. That he should think of others at such a difficult time for him seemed completely in character.

I looked up to Bobby when I was a kid, and even more so as an adult. It is a rare person who lives up to what you imagine them to be, and more. For that, I thank you, Bobby Murcer.

A classic product of a fine NYSE-listed company, of course!

This post marks the debut of The Nasdaq Decoder Ring, an occasional feature in this space. In each episode, we’ll take one of Nasdaq’s marketing claims and pass it through this neat Nasdaq Decoder Ring that I got in a box of Cracker Jack. You look through the Decoder Ring viewfinder and apply a little lemon juice, and the reality becomes clearly visible.

If you’ll forgive a plug, I’m proud to say Cracker Jack happens to be made by Frito-Lay, which is part of PepsiCo, Inc. (NYSE: PEP). But I digress.

I lent the ring to my colleague Christiaan Brakman earlier today, and here’s what he reported back:

Hey, want to be the biggest, largest or have the most?

Just keep on saying it, in hopes that one day people might believe it, like Nasdaq OMX tried once again this morning, announcing in a press release that Nasdaq “attracted more new listings than any other U.S. exchange” in second-quarter 2008.

Fact is, in the month of June 2008 alone, NYSE Euronext’s U.S. markets attracted 42 new listings — as many as Nasdaq did in the entire second quarter 2008.

NYSE Euronext new listings data is available in our monthly volume release, announced last Tuesday, July 8.

For those really interested in this side of the business: IPO proceeds raised on NYSE Euronext markets in the first half of 2008 were the most of any exchange in the world, approximately 28 times the value raised by IPOs on Nasdaq OMX.

Thanks, Christiaan. That’s one cool ring, huh? Get it back to me when you have a chance. I have a feeling it’s going to come in handy.

A classic product of a fine NYSE-listed company, of course!

This post marks the debut of The Nasdaq Decoder Ring, an occasional feature in this space. In each episode, we’ll take one of Nasdaq’s marketing claims and pass it through this neat Nasdaq Decoder Ring that I got in a box of Cracker Jack. You look through the Decoder Ring viewfinder and apply a little lemon juice, and the reality becomes clearly visible.

If you’ll forgive a plug, I’m proud to say Cracker Jack happens to be made by Frito-Lay, which is part of PepsiCo, Inc. (NYSE: PEP). But I digress.

I lent the ring to my colleague Christiaan Brakman earlier today, and here’s what he reported back:

Hey, want to be the biggest, largest or have the most?

Just keep on saying it, in hopes that one day people might believe it, like Nasdaq OMX tried once again this morning, announcing in a press release that Nasdaq “attracted more new listings than any other U.S. exchange” in second-quarter 2008.

Fact is, in the month of June 2008 alone, NYSE Euronext’s U.S. markets attracted 42 new listings — as many as Nasdaq did in the entire second quarter 2008.

NYSE Euronext new listings data is available in our monthly volume release, announced last Tuesday, July 8.

For those really interested in this side of the business: IPO proceeds raised on NYSE Euronext markets in the first half of 2008 were the most of any exchange in the world, approximately 28 times the value raised by IPOs on Nasdaq OMX.

Thanks, Christiaan. That’s one cool ring, huh? Get it back to me when you have a chance. I have a feeling it’s going to come in handy.

Hello my fine options friends! I am writing you to give you the latest skinny on our Complex Order Book, coming to your favorite Options Trading Platform the first part of August 2008.

Everything you love about NYSE Arca Options will be in place for complex order trading—speed, transparency, throughput—with the addition of extremely low-latency trading between our very liquid equity and options platforms (it is SO FAST!), which will supercharge your execution opportunities for option/equity trades — and you’ll enjoy the usual lightning-fast order handling for options-only complex orders that you know and love as a participant in our single- leg markets.

Here’s the scoop:

• You can send up to 5 legs in any complex order, which means up to 5 option legs or up to 4 option legs and 1 equity leg.

• NYSE Arca offers riskless execution for options-only and options with stock complex orders, by matching complex orders within the complex order book OR by interacting with the liquid simple markets on both the options and equities platforms.

• Complex orders can be priced in penny increments.

• Marketable complex orders will trade immediately, with no auction or delay in processing.

• You can send in complex orders via FIX or ArcaDirect (specs for both are located on the website).

• Complex order will always receive price improvement, if available from resting complex orders or the simple market legs.

• You can send delta neutral as well as buy write orders.

• A new ArcaBook subscription will be available for the complex order book.
o Top of Book Messages
o New Instrument Messages

• In order to identify and organize complex instruments and orders, NYSE Arca will disseminate Complex FAST symbols via ArcaBook.
o FAST Symbol will be created for the order immediately upon receipt from FIX if the instrument does not already exist.
o An ArcaBook message will be sent that contains the leg definitions of the complex order along with the FAST symbol.
o Once defined, any further activity in the instrument will be broadcast using the FAST symbol only.
o These FAST symbols will be available to ArcaBook users whenever they subscribe, not only at start of day.

If you have any questions regarding our upcoming complex order book, feel free to drop me a line. I’ll talk your ear off if you give me the chance! Vive la Complex!

Sorry I have been absent from the MatchPoint blog for a few months. I have been recovering from a detached retina and it is hard to write when you cannot see…but there is, I suppose, something fitting in a dark pool provider having a spokesperson who cannot see. Though I am beginning to realize that what we may see before us can often prevent us from seeing the real truth. So let me get started….

For many months now, dark pools have been all the rage. All we have to do is look at the volumes to see that between 500 million and upwards of 1 billion shares a day trade through dark pools. (Lord knows how much is actually posted or routed through these systems but are not executed.) There must be huge demand for these dark pools with that volume pulsing through them…but is this really true?

One of the major (if not the primary) reasons a dark pool is “dark” or non-displayed is so that users may submit large orders and cross large blocks of stock without impacting the market or causing information leakage. Makes sense, right?

Well, recently, Justin Schack at Rosenblatt Securities printed an excellent article called “Let There be Light”. He did a review of all the top dark pools. Of the 50+ dark pools, only three actually trade blocks of stock. See for yourself. They are Liquidnet (52,000 avg. trade size in May), Pipeline (~46,000 avg. trade size in May) and ITG Posit (~5,000 avg trade size in May). Every other dark pool had average trade sizes at or below 600 shares! Do we really need a dark pool to trade 600 shares? Hmm….

Which really begs the questions, are dark pools other than the three mentioned above really adding any value at all (simply rearranging liquidity for commercial purposes); or worse yet, are they doing harm by making it harder and more expensive for investors to find true natural block liquidity? And what can we learn from the three dark pools mentioned above that enables them to realize the promise of a non-displayed environment?

The hint (which I will explain in another post) is that a dark pool needs more than opacity to put up blocks or even good trades and that something “more” may force us to rethink the importance of milli-second, high-frequency trading. Can a slower, more methodical electronic marketplace that aggregates non-displayed liquidity and/or permits qualified negotiation be a more effective solution?

Maybe we need to stop focusing on trading volume statistics and start thinking about market functionality and quality. And what are the real mechanics behind best execution in a non-displayed environment?

Well, my eyes are tired, I gotta put another round of drops in my eye and my vision is blurry but I am kinda feeling that I am on the path to seeing things more clearly. Hopefully we all are….

Sorry I have been absent from the MatchPoint blog for a few months. I have been recovering from a detached retina and it is hard to write when you cannot see…but there is, I suppose, something fitting in a dark pool provider having a spokesperson who cannot see. Though I am beginning to realize that what we may see before us can often prevent us from seeing the real truth. So let me get started….

For many months now, dark pools have been all the rage. All we have to do is look at the volumes to see that between 500 million and upwards of 1 billion shares a day trade through dark pools. (Lord knows how much is actually posted or routed through these systems but are not executed.) There must be huge demand for these dark pools with that volume pulsing through them…but is this really true?

One of the major (if not the primary) reasons a dark pool is “dark” or non-displayed is so that users may submit large orders and cross large blocks of stock without impacting the market or causing information leakage. Makes sense, right?

Well, recently, Justin Schack at Rosenblatt Securities printed an excellent article called “Let There be Light”. He did a review of all the top dark pools. Of the 50+ dark pools, only three actually trade blocks of stock. See for yourself. They are Liquidnet (52,000 avg. trade size in May), Pipeline (~46,000 avg. trade size in May) and ITG Posit (~5,000 avg trade size in May). Every other dark pool had average trade sizes at or below 600 shares! Do we really need a dark pool to trade 600 shares? Hmm….

Which really begs the questions, are dark pools other than the three mentioned above really adding any value at all (simply rearranging liquidity for commercial purposes); or worse yet, are they doing harm by making it harder and more expensive for investors to find true natural block liquidity? And what can we learn from the three dark pools mentioned above that enables them to realize the promise of a non-displayed environment?

The hint (which I will explain in another post) is that a dark pool needs more than opacity to put up blocks or even good trades and that something “more” may force us to rethink the importance of milli-second, high-frequency trading. Can a slower, more methodical electronic marketplace that aggregates non-displayed liquidity and/or permits qualified negotiation be a more effective solution?

Maybe we need to stop focusing on trading volume statistics and start thinking about market functionality and quality. And what are the real mechanics behind best execution in a non-displayed environment?

Well, my eyes are tired, I gotta put another round of drops in my eye and my vision is blurry but I am kinda feeling that I am on the path to seeing things more clearly. Hopefully we all are….

I shoulda, woulda, coulda posted this earlier, but better late than never. Our new NYSE Order Imbalances product went live before this morning’s opening. It increases the amount of information available in advance of the two most critical points of the trading day.

Here’s a link to the press release, and a link to the home page for NYSE Oreder Imbalances. Excerpt from the press release:

“The auctions that take place at the open and close of the New York Stock Exchange are unmatched for their liquidity and price discovery. Now we are providing investors with greater visibility into that auction process, helping customers make better-informed decisions and more effectively manage their execution strategies,” said Mark Schaedel, vice president, NYSE Data Products. “We believe the end result will be increased participation in the open and close, which in turn further contributes to market quality.”

NYSE Order Imbalances will include the following information: time (in milliseconds); symbol; side of the imbalance (buy/sell); paired quantity; imbalance quantity; and reference price (last sale).

Opening imbalances will be disseminated every 5 minutes between 8:30-9 a.m.; every minute between 9-9:20 a.m.; and every 15 seconds between 9:20 and the open (or 9:35, whichever comes first). Closing imbalances will be disseminated every 15 seconds between 3:40-3:50 p.m. and every 5 seconds between 3:50 p.m. and the close.

The new NYSE Order Imbalances product will be provided free of charge to NYSE OpenBook customers. It follows the June 20 introduction of NYSE OpenBook Ultra, which provides a low-latency, event-driven look at the NYSE limit-order book as well as rich content and functionality; and the June 24 launch of NYSE Realtime Stock Prices, which enables information providers to offer NYSE prices in real time and free of charge to unlimited public investors.

A lot of good stuff happening on the data front. Hope it serves you well.

Today in NYSE History (NYSE.com):
1 July 1999 — Bowne & Company Inc. was listed. Founded in 1775, it is the NYSE’s oldest listed company.

I shoulda, woulda, coulda posted this earlier, but better late than never. Our new NYSE Order Imbalances product went live before this morning’s opening. It increases the amount of information available in advance of the two most critical points of the trading day.

Here’s a link to the press release, and a link to the home page for NYSE Oreder Imbalances. Excerpt from the press release:

“The auctions that take place at the open and close of the New York Stock Exchange are unmatched for their liquidity and price discovery. Now we are providing investors with greater visibility into that auction process, helping customers make better-informed decisions and more effectively manage their execution strategies,” said Mark Schaedel, vice president, NYSE Data Products. “We believe the end result will be increased participation in the open and close, which in turn further contributes to market quality.”

NYSE Order Imbalances will include the following information: time (in milliseconds); symbol; side of the imbalance (buy/sell); paired quantity; imbalance quantity; and reference price (last sale).

Opening imbalances will be disseminated every 5 minutes between 8:30-9 a.m.; every minute between 9-9:20 a.m.; and every 15 seconds between 9:20 and the open (or 9:35, whichever comes first). Closing imbalances will be disseminated every 15 seconds between 3:40-3:50 p.m. and every 5 seconds between 3:50 p.m. and the close.

The new NYSE Order Imbalances product will be provided free of charge to NYSE OpenBook customers. It follows the June 20 introduction of NYSE OpenBook Ultra, which provides a low-latency, event-driven look at the NYSE limit-order book as well as rich content and functionality; and the June 24 launch of NYSE Realtime Stock Prices, which enables information providers to offer NYSE prices in real time and free of charge to unlimited public investors.

A lot of good stuff happening on the data front. Hope it serves you well.

Today in NYSE History (NYSE.com):
1 July 1999 — Bowne & Company Inc. was listed. Founded in 1775, it is the NYSE’s oldest listed company.