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