New Specialist Rule ?
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Here's how REG NMS is suposed to work on the NYSE.
The SEC Regulation NMS (National Market System) itself (but you're not going to read it).
UPDATE: SEC's Reg NMS To Arrive On Heels Of Market Drop
02 Mar 07 18:23
By Gaston F. Ceron
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Less than a week after being tested by a plunge in stock prices and spikes in trading activity and volatility, U.S. equities markets face a major shift on Monday, when a far-reaching overhaul of trading rules will start to set in.
The new rules, part of the Securities and Exchange Commission's Regulation NMS, would essentially require that orders to buy and sell shares be sent to any market that presents the best bid or offer that is electronically accessible. Preparation for the changes has required extensive systems and linkage work on Wall Street, raising questions about how well exchanges and securities firms will fare as the reforms are rolled out.
Although the rule changes have been coming for a long time, and they have been delayed before, their timing may not be ideal. Tuesday's stock-market downswing led to a surge in volume and problems such as delays at the New York Stock Exchange and a computer glitch at Dow Jones & Co. (DJ), publisher of this newswire, that sent the Dow Jones Industrial Average in a sudden and steep drop.
In the wake of this week's volatility, some market observers wondered if the rules would be put off again. Some brokerage firms sought further delays, according to people familiar with the matter. But the SEC said late Friday that things would proceed as planned, although the agency said it will keep an eye on the performance of Wall Street's systems.
On Monday, exchanges and electronic-trading networks will begin complying with the trading phase of the rule package, the SEC said. The trading venues will implement policies and procedures reasonably designed to prevent better-priced quotes from being traded-through, or ignored, the agency said in a statement. Other steps will follow: On July 9, securities firms will comply with the trade- through provisions of Regulation NMS for 250 pilot stocks, the SEC said.
The new rules will affect how markets such as the Big Board, a unit of NYSE Group Inc. (NYX), and the Nasdaq Stock Market Inc. (NDAQ) function and compete. While their ultimate effect remains to be seen, market experts have said the new rules could make it easier for smaller trading venues to compete.
"The trading phase is designed to provide all industry participants with an opportunity to gain experience with the new trading rules ... prior to Regulation NMS becoming fully effective," said Erik Sirri, director of the SEC's division of market regulation, in the SEC statement.
Some on Wall Street are bracing for possible hiccups next week and beyond as the rule changes take hold.
"All firms are facing massive IT challenges as the market transitions to Reg. NMS next week. The industry is halfway through rolling out many interconnected systems," said David Cummings, chief executive of BATS Trading Inc., a Kansas City, Mo., firm that runs an electronic-trading system, in an email to market participants and others. He said that some glitches are inevitable and that although BATS is ready, problems that affect it could develop elsewhere.
"This may cause BATS to 'go dark' from time to time next week," Cummings said.
The SEC is aware of the potential for problems.
"A market's rollout of new trading systems inevitably presents challenges for the market and its participants," Sirri said. "In addition, the exceptional trading volume and price volatility of the equity markets over the last few days raise the potential of even greater challenges during the trading phase."
The SEC plans to monitor the markets closely to see if systems or other trading problems develop and said that exceptions may be granted if trouble erupts.
"Should serious systems problems or difficult market conditions arise, I believe that the first priority should be to enable the equity markets to continue trading and establishing the most efficient prices possible for investors," Sirri said.
At Nasdaq, officials told traders that they're ready for Regulation NMS. A spokesman for the NYSE, Richard Adamonis, said the exchange is prepared for the switch. But the NYSE told the SEC that it wouldn't be able to begin routing orders to participants in an alternative display facility that is operated by the National Association of Securities Dealers and used to display quotations and report trades and to International Securities Exchange Holdings Inc. (ISE) until certain software is rolled out.
"We believe that rushing the ADF participant/ISE routing rollout, without appropriate testing and quality assurance, puts our trading systems and, thus, the industry and investors at unnecessary risk," the NYSE said in a letter to the SEC on Thursday. Representatives for the NASD and the ISE declined to comment.
-By Gaston F. Ceron, Dow Jones Newswires; 201-938-5234; gaston.ceron@ dowjones.com
The SEC Regulation NMS (National Market System) itself (but you're not going to read it).
UPDATE: SEC's Reg NMS To Arrive On Heels Of Market Drop
02 Mar 07 18:23
By Gaston F. Ceron
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Less than a week after being tested by a plunge in stock prices and spikes in trading activity and volatility, U.S. equities markets face a major shift on Monday, when a far-reaching overhaul of trading rules will start to set in.
The new rules, part of the Securities and Exchange Commission's Regulation NMS, would essentially require that orders to buy and sell shares be sent to any market that presents the best bid or offer that is electronically accessible. Preparation for the changes has required extensive systems and linkage work on Wall Street, raising questions about how well exchanges and securities firms will fare as the reforms are rolled out.
Although the rule changes have been coming for a long time, and they have been delayed before, their timing may not be ideal. Tuesday's stock-market downswing led to a surge in volume and problems such as delays at the New York Stock Exchange and a computer glitch at Dow Jones & Co. (DJ), publisher of this newswire, that sent the Dow Jones Industrial Average in a sudden and steep drop.
In the wake of this week's volatility, some market observers wondered if the rules would be put off again. Some brokerage firms sought further delays, according to people familiar with the matter. But the SEC said late Friday that things would proceed as planned, although the agency said it will keep an eye on the performance of Wall Street's systems.
On Monday, exchanges and electronic-trading networks will begin complying with the trading phase of the rule package, the SEC said. The trading venues will implement policies and procedures reasonably designed to prevent better-priced quotes from being traded-through, or ignored, the agency said in a statement. Other steps will follow: On July 9, securities firms will comply with the trade- through provisions of Regulation NMS for 250 pilot stocks, the SEC said.
The new rules will affect how markets such as the Big Board, a unit of NYSE Group Inc. (NYX), and the Nasdaq Stock Market Inc. (NDAQ) function and compete. While their ultimate effect remains to be seen, market experts have said the new rules could make it easier for smaller trading venues to compete.
"The trading phase is designed to provide all industry participants with an opportunity to gain experience with the new trading rules ... prior to Regulation NMS becoming fully effective," said Erik Sirri, director of the SEC's division of market regulation, in the SEC statement.
Some on Wall Street are bracing for possible hiccups next week and beyond as the rule changes take hold.
"All firms are facing massive IT challenges as the market transitions to Reg. NMS next week. The industry is halfway through rolling out many interconnected systems," said David Cummings, chief executive of BATS Trading Inc., a Kansas City, Mo., firm that runs an electronic-trading system, in an email to market participants and others. He said that some glitches are inevitable and that although BATS is ready, problems that affect it could develop elsewhere.
"This may cause BATS to 'go dark' from time to time next week," Cummings said.
The SEC is aware of the potential for problems.
"A market's rollout of new trading systems inevitably presents challenges for the market and its participants," Sirri said. "In addition, the exceptional trading volume and price volatility of the equity markets over the last few days raise the potential of even greater challenges during the trading phase."
The SEC plans to monitor the markets closely to see if systems or other trading problems develop and said that exceptions may be granted if trouble erupts.
"Should serious systems problems or difficult market conditions arise, I believe that the first priority should be to enable the equity markets to continue trading and establishing the most efficient prices possible for investors," Sirri said.
At Nasdaq, officials told traders that they're ready for Regulation NMS. A spokesman for the NYSE, Richard Adamonis, said the exchange is prepared for the switch. But the NYSE told the SEC that it wouldn't be able to begin routing orders to participants in an alternative display facility that is operated by the National Association of Securities Dealers and used to display quotations and report trades and to International Securities Exchange Holdings Inc. (ISE) until certain software is rolled out.
"We believe that rushing the ADF participant/ISE routing rollout, without appropriate testing and quality assurance, puts our trading systems and, thus, the industry and investors at unnecessary risk," the NYSE said in a letter to the SEC on Thursday. Representatives for the NASD and the ISE declined to comment.
-By Gaston F. Ceron, Dow Jones Newswires; 201-938-5234; gaston.ceron@ dowjones.com
I got timed out starting and editing my post above.
The Dow Jones article is as good an explanation as any as to the Reg NMS rollout (along with trepidations) next week.
Also. here's how (scroll & click around) NASDAQ's treatment of Reg NMS is supposed to go.
The Dow Jones article is as good an explanation as any as to the Reg NMS rollout (along with trepidations) next week.
Also. here's how (scroll & click around) NASDAQ's treatment of Reg NMS is supposed to go.
Ok, so let me try and understand this:
Once nms starts, it means that there will be no more bullshit trades above and below the absolute best bid and offer.
Now if that's correct, isn't that a good thing for active traders?
I have become sick of trades that go on above and below my bids and offers and leave me hanging. Now this can't happen.
If this is the case, then it's the best thing that happened for us in decades..
Once nms starts, it means that there will be no more bullshit trades above and below the absolute best bid and offer.
Now if that's correct, isn't that a good thing for active traders?
I have become sick of trades that go on above and below my bids and offers and leave me hanging. Now this can't happen.
If this is the case, then it's the best thing that happened for us in decades..
Scalper007, on the NYSE I don't think that will be the case. The NYSE has a two tier system. NYOB represents the "retail" market. There is a secondary market that only floor traders and upstairs traders working at the exchange have access to. That is where all the trades take place away from the market.
:eek: So they're not getting rid of the two tier system with the implementation of nms?
I just don't understand these crooks. If nms is to protect best bids and offers, then how could the floor traders have the pivilege of trading beyond the best quotes?
Even after nms, if there are still trades printing over and below the best bids and offers then obviously reg nms is just a way for nyse to steal market share from nasdaq...
I just don't understand these crooks. If nms is to protect best bids and offers, then how could the floor traders have the pivilege of trading beyond the best quotes?
Even after nms, if there are still trades printing over and below the best bids and offers then obviously reg nms is just a way for nyse to steal market share from nasdaq...
Well, I think it saves you from the fate of sending a market order to the specialist and having him hold it for 20 seconds, batch it with 10 other market orders and then filling it .50 cents lower for his own account; then spiking it back up $1 
It will be good for the retail trader, because the specialist will be obligated to give you the best RETAIL price or pass the order to whoever will. But the institutions and big traders will probably always have special access on the floor for large block trades. The NYSE is a farce, imo.
It will be good for the retail trader, because the specialist will be obligated to give you the best RETAIL price or pass the order to whoever will. But the institutions and big traders will probably always have special access on the floor for large block trades. The NYSE is a farce, imo.