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Institutional Investor Magazine: ‘Up Off The Floor’

Posted 2008-11-21 09:29 in Greenspan Investment

If you’re interested in what’s going on from a competititve standpoint at the New York Stock Exchange and at parent NYSE Euronext, quit reading this stupid blog and pick up the November issue of Institutional Investor, which has two articles you might want to see. Note, both of these links are subscription-only:

1) Up Off The Floor, which looks at the impact to date of the new changes in the NYSE trading model. Excerpt:

After two centuries of dominance, the exchange was steadily losing ground, surrendering crucial market share to electronic rivals; a decade ago, according to Edward Ditmire, a stock analyst at Fox-Pitt Kelton, 80 percent of the daily trades in shares issued by companies listed on the NYSE were executed at NYSE. In October that figure was 42.8 percent. The good news, though, is that NYSE Euronext gained share in September, reversing a year-long slide. The market share for October was up from 41.9 percent in September, which was up slightly from 41.4 percent in August. That’s still well below the 59.8 percent it logged at the end of 2007, but at least the decline has been reversed. Exchange officials are encouraged to think that in a time of extreme stress traders are turning to them. “This difficult environment is giving us a chance to prove our value to all our clients,” says Lawrence Leibowitz, head of U.S. execution and global technology.

Further, exchange officials say that overall numbers reflect even greater strength during the most critical periods of the day, when prices are set. “We are now transacting the lion’s share of the trading business during the open and closing hours of the market, because we are able to handle those volumes at a time when other markets seem too nervous to quote in size,” [CEO Duncan] Niederauer says.

Adds the managing director of trading operations at one bulge-bracket firm: “Sometimes it feels as if the stock exchange is the only place that I can count on to act the way it’s supposed to.”

Niederauer still faces difficult challenges. The core business is under assault by digital technology, deregulation and globalization, and the company needs to find new sources of revenue and growth. “There aren’t many companies that have ever gone through such a massive transformation. The problem they face today is that they have to take all the raw material they have and make it work properly,” says Ditmire.

I can’t vouch for those market-share numbers; they sound to me like NYSE and NYSE Arca combined rather than NYSE stand-alone. I do see that the NYSE Trading Floor is participating more, reversing a long trend of decline. The rollout of our changes is still in progress and I’m cautiously optimistic about the impact, but I also want to note that as I’ve said before, what we’re doing is not a panacea for everything that ails today’s fragmented, hyper-competitive, highly automated, penny-increment markets.

2) Trading Costs Are Rising is based on Elkins/McSherry’s annual survey of all-in trading costs at markets and firms around the world. For at least the third consecutive year, the survey finds that NYSE-listed stocks have the lowest trading costs of any in the world. Excerpt:

The NYSE, the flagship of multinational giant NYSE Euronext, now trades a minority of its own listed shares, as the liquidity has shifted to the Nasdaq and alternative venues, but the NYSE has done its part to push institutional trading efficiency. Handling more than 500 million shares a day in blocks of 10,000 or more, the NYSE is “still the largest block destination on the Street, but we don’t always get credit for that,” says Joseph Mecane, the Big Board’s executive vice president and chief administrative officer for U.S. markets. Stealing some of that thunder are block-execution specialists like Fox River, Liquidnet and Pipeline Trading Systems, all ranking high in Elkins/McSherry’s brokerage league tables in terms of bettering global benchmark averages.

Not only are NYSE-listed stocks cheapest to trade, but the cost continues to decline, year after year:
2008: 13.89 basis points
2007: 14.80
2006: 17.51
2005: 23.26
2004: 25.87

Happy Friday, folks. A morning injection of historical trivia: how many of you were around for the following?

Today in NYSE History (NYSE.com)
21 Nov. 1983 — The stocks of the seven “Baby Bell” companies - spun-off in the AT&T divestiture - began trading, adding 1.5 billion shares to the list in a single day.

冷颼颼

Posted 2008-11-19 21:47 in diet blog

寶寶,

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