NYSE reserve display change

L

listedguru

Did anyone else happen to see that rule change the nyse snuck in on us effective today (October 4th). For some reason I can't cut and paste from the nyse website but here is the jest:

Beginning on October 4, 2007, the NYSE is reducing the minimum displayed size requirement that Floor brokers and specialists must meet to 100 shares in order to have non-displayed interest at the NYSE quotation.

So I guess they can now sit there showing 100 shares and filling thousands. I didn't mind the previous requirement where they had to show at least 1000 shares in order to use the reserve feature but I think this stinks. This is going to make the liquidity look even worse. The nyse is looking like nasdaq more and more everyday.

Thoughts?

-Guru
 
Yeah, I saw it in action in one stock today, when at some point 100 shares bid was refreshing over and over again. Reserve liquidity still can be spotted, but not as easy as with 1K shares though... More and more work for tape readers...
 
Yeah I just hope that at least some size is still shown on the book. I don't like the smoke and mirrors stuff (ie nasdaq) so hopefully this won't be as bad as I'm imaging...
 
That's how it looked today (NYSE feed):

Code: 
13:43:07  29.36 x 29.37  1 x 27  
13:43:08  1s29.36
13:43:08  29.36 x 29.37  1 x 27  
13:43:09  1s29.36
13:43:10  29.36 x 29.37  1 x 27  
13:43:10  1s29.36
13:43:10  1s29.36
13:43:11  29.36 x 29.37  1 x 27  
13:43:11  1s29.36
13:43:12  29.36 x 29.37  1 x 27  
13:43:13  1s29.36
13:43:14  29.36 x 29.37  1 x 27  
13:43:14  1s29.36
13:43:15  29.36 x 29.37  1 x 27  
13:43:15  1s29.36
13:43:16  29.36 x 29.37  1 x 27  
13:43:17  1s29.36
13:43:18  29.36 x 29.37  1 x 27  
13:43:18  1s29.36
13:43:19  29.36 x 29.37  1 x 27  
13:43:19  1s29.36
13:43:20  29.36 x 29.37  1 x 27  
13:43:21  29.36 x 29.37  1 x 27
 
I just wonder why they implemented this rule change? Hopefully it turns out to be a non event. I really don't run into too much refreshing where they show 1000 shares so hopefully not much will change? I guess time will tell.



-Guru
 
Quote from listedguru:

I just wonder why they implemented this rule change? Hopefully it turns out to be a non event. I really don't run into too much refreshing where they show 1000 shares so hopefully not much will change? I guess time will tell.



-Guru
More...

It's very hard to see it by a naked eye :)

I see a lot of refreshing every day in many stocks. I think the reason behind this change is that the specialist and floor brokers want to hide their hand.
 
This does kind of suck. Because previously, you would have 1000 shares stepping down on the offer say, and you see it on the level II but not the NYOB so you know it's a floor broker reserve order or specialist order, and you see it print many thousands of shares and still show 1000... it might knock the stock down 40 or 50 cents, until someone upticks 200 shares and the size decrements to 800. That meant there was no reserve order anymore, and if you were the first to buy those 800 shares, generally speaking it was free money, and since frequently I would be the first to notice this... that was a nice trade. Now, they can game us tape readeres by showing 1000 for a while, then decrementing as though they have no more reserve and then refreshing with 100.
 
Quote from FXTraderWill:

This does kind of suck. Because previously, you would have 1000 shares stepping down on the offer say, and you see it on the level II but not the NYOB so you know it's a floor broker reserve order or specialist order, and you see it print many thousands of shares and still show 1000... it might knock the stock down 40 or 50 cents, until someone upticks 200 shares and the size decrements to 800. That meant there was no reserve order anymore, and if you were the first to buy those 800 shares, generally speaking it was free money, and since frequently I would be the first to notice this... that was a nice trade. Now, they can game us tape readeres by showing 1000 for a while, then decrementing as though they have no more reserve and then refreshing with 100.
More...

In order to post reserve liquidity the specialist/floor broker had to show at least 1K, and it would be shown on NYOB. What Level II are you referring to?
 
that really sucks, but i guess there's no rule that says exchanges exist to serve the public interest or provide a fair and transparent place to trade (nobody's saying there is - just thinking aloud). exchanges are in the business of misrepresenting liquidity.. more and more it seems
 
Well from everything you hear the specialist isn't involved much anymore so this might not be a big deal. I didn't notice anything different yesterday (although that was the first day) but it will be interesting to see if anything changes going forward.

-Guru
 
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