=DJ NYSE Hides Names Of Stock Buyers And Sellers From Traders
Wed Jan 26 15:40:42 2011 EST
By Kristina Peterson, Donna Kardos Yesalavich and Jacob Bunge
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Information about stock market trades that used to flow
through the floor of the New York Stock Exchange will now be kept secret from
traders, thanks to a procedural change quietly implemented last week.
In a move rankling the floor's denizens, names of buyers and sellers on the
storied exchange's "book" of orders will no longer be visible to traders.
Originally recorded in a physical book, the exchange's orders are now
transmitted electronically.
Designated market makers, who have obligations to keep trading smooth in
specific stocks on NYSE Euronext's (NYX) New York Stock Exchange, are no longer
be able to see who has entered interest in buying and selling in a stock before
the trade is executed, according to a memorandum sent Jan. 18 to members of the
stock exchange. The new guideline went into effect Jan. 19.
Traders learned of the change at an urgent 8 a.m. meeting held on Jan. 18,
said someone familiar with the situation. Officials from the stock exchange
declined to comment.
Floor brokers, accustomed to being able to share information about the
interest in a stock with their clients, said the change will curtail their
ability to help facilitate trades directly between buyers and sellers. The
floor brokers were often able to get identifying information about trading
interest from the designated market makers.
"We used to be able to see who was in the crowd--now they've taken that away
from us," said Alan Valdes, director of floor trading at Kabrik Trading.
However, he said preserving the anonymity of all buyers and sellers helps keep
trading as fair as possible. "It's the right move," Valdes said.
Other traders said knowing the identity of buyers and sellers helps them
prevent erroneous trades from being executed. If a suspicious order is entered,
designated market makers can sometimes verify whether the investor intended to
place the order.
Still, many acknowledged that the identifying information has become less
important in a lightning-fast market where an increasing amount of market
activity occurs away from the operator of the Big Board.
Given the speed at which markets operate today, floor-based market makers are
unlikely to be able to use identifying information to gain any advantage in
making trading decisions, said Joseph Cangemi, chairman of the Security Traders
Association. Traders "used to that information have to find a way to grow past
that particular procedure of information gathering," he said.
Keith Bliss, director of sales and marketing at Cuttone & Co., said his firm
wasn't upset by the rule and didn't expect to feel an effect from it.
"Bear in mind that a lot of our order flow is electronically received and
delivered out to the marketplace right now," he said. "We're not really
concerned about where the flows are actually coming from per se. Of course we
want to know if there are large things going on that are going to impact the
stock, but who's actually doing it is not of great interest to us in most
cases."
Traders who fail to comply with the new guideline face disciplinary action,
according to the memorandum.
-By Kristina Peterson, Donna Kardos Yesalavich and Jacob Bunge, Dow Jones
Newswires; 212-416-2917; kristina.peterson@dowjones.com
-Jessica Holzer contributed to this article.
(END) Dow Jones Newswires
01-26-11 1540ET
Copyright (c) 2011 Dow Jones & Company, Inc.
Wed Jan 26 15:40:42 2011 EST
By Kristina Peterson, Donna Kardos Yesalavich and Jacob Bunge
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Information about stock market trades that used to flow
through the floor of the New York Stock Exchange will now be kept secret from
traders, thanks to a procedural change quietly implemented last week.
In a move rankling the floor's denizens, names of buyers and sellers on the
storied exchange's "book" of orders will no longer be visible to traders.
Originally recorded in a physical book, the exchange's orders are now
transmitted electronically.
Designated market makers, who have obligations to keep trading smooth in
specific stocks on NYSE Euronext's (NYX) New York Stock Exchange, are no longer
be able to see who has entered interest in buying and selling in a stock before
the trade is executed, according to a memorandum sent Jan. 18 to members of the
stock exchange. The new guideline went into effect Jan. 19.
Traders learned of the change at an urgent 8 a.m. meeting held on Jan. 18,
said someone familiar with the situation. Officials from the stock exchange
declined to comment.
Floor brokers, accustomed to being able to share information about the
interest in a stock with their clients, said the change will curtail their
ability to help facilitate trades directly between buyers and sellers. The
floor brokers were often able to get identifying information about trading
interest from the designated market makers.
"We used to be able to see who was in the crowd--now they've taken that away
from us," said Alan Valdes, director of floor trading at Kabrik Trading.
However, he said preserving the anonymity of all buyers and sellers helps keep
trading as fair as possible. "It's the right move," Valdes said.
Other traders said knowing the identity of buyers and sellers helps them
prevent erroneous trades from being executed. If a suspicious order is entered,
designated market makers can sometimes verify whether the investor intended to
place the order.
Still, many acknowledged that the identifying information has become less
important in a lightning-fast market where an increasing amount of market
activity occurs away from the operator of the Big Board.
Given the speed at which markets operate today, floor-based market makers are
unlikely to be able to use identifying information to gain any advantage in
making trading decisions, said Joseph Cangemi, chairman of the Security Traders
Association. Traders "used to that information have to find a way to grow past
that particular procedure of information gathering," he said.
Keith Bliss, director of sales and marketing at Cuttone & Co., said his firm
wasn't upset by the rule and didn't expect to feel an effect from it.
"Bear in mind that a lot of our order flow is electronically received and
delivered out to the marketplace right now," he said. "We're not really
concerned about where the flows are actually coming from per se. Of course we
want to know if there are large things going on that are going to impact the
stock, but who's actually doing it is not of great interest to us in most
cases."
Traders who fail to comply with the new guideline face disciplinary action,
according to the memorandum.
-By Kristina Peterson, Donna Kardos Yesalavich and Jacob Bunge, Dow Jones
Newswires; 212-416-2917; kristina.peterson@dowjones.com
-Jessica Holzer contributed to this article.
(END) Dow Jones Newswires
01-26-11 1540ET
Copyright (c) 2011 Dow Jones & Company, Inc.