NYSE to offer electronic reserve orders

With their second type of reserve order it sounds like they are trying to get into the Dark Pool game.


""An alternative version will have no displayed amount, will not be eligible for inclusion in floor-based trades and will not be trade-through protected for such trades.
""
 
Quote from listedguru:

I don't like the sound of this?

http://www.nyse.com/press/1206698772983.html

Thoughts?

-Guru

All we need is a bunch of hidden order bs on the nyse now:(
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Yeah, it's getting harder and harder to spot institutional/floor orders, and the specialist reserve liquidity is an important piece of info IMHO.

But this is good for NYSE - they fight back for the flow they've lost in the past few years, and if NYSE attracts more participants, and the flow gets less fragmented for the benefit of the Tape Reader.
 
Here is some additional info:

Coming Soon to the New York Stock Exchange: Reserve Orders for Electronic Entry
-- Reserve Orders Will Offer Customers Greater Choice, Flexibility --

In response to customer interest, the New York Stock Exchange is planning to introduce in the coming months two types of reserve orders for electronic entry. The new order types will provide customers with greater choice and flexibility in how they access the unparalleled liquidity of the NYSE.

Phase 1
• To be introduced in 2Q 2008 with a 100-stock pilot;
• Minimum published amount: 100 shares;
• Minimum published amount will be displayed to specialists physically on the NYSE trading floor and on NYSE OpenBook®;
• Will not be available to the specialist API and therefore not eligible for electronic price improvement from the specialist;
• Both the displayed portion and the hidden, reserved portion will participate in all other electronic executions;
• In the event of a manual trade, will have trade-through protection on the trading floor by being included in the aggregate with orders that are eligible to participate in that trade;
• Minimum published balances of fewer than 100 shares will be rejected.

Phase 2
• An additional version of the reserve order will be introduced in 3Q 2008, also with a pilot in the same 100 stocks;
• Published quantity will be zero;
• Completely dark – will not be displayed to specialists physically on the trading floor or on NYSE OpenBook®;
• Not eligible for inclusion in manual, floor-based trades; cannot be probed for block trades on the floor; and is not trade-through protected for such trades;
• In Phase 2, customers who continue to elect the first version of the Reserve Order – also called the Block Reserve version – will continue to publish at least 100 shares and in doing so will have their orders available for trade-through protection for manual, floor-based trades. In addition, floor brokers interested in trading in size will be able to probe this order type on request and in a fully auditable fashion.

Both phases – as well as the ability to extend the pilot to all securities – are subject to approval by the Securities and Exchange Commission. In addition, both phases will be supported through the NYSE Common Message Switch (CMS) and will be available in the Common Customer Gateway (CCG) shortly at a date to be announced.
 
The whole industry is moving towards less exposure to the open market. Here is another trend that is far, far far more dangerous to the trader and possibly even to the investment community itself, Internal Crossing Of Orders:

http://www.advancedtrading.com/blog/archives/2008/02/nyse_matchpoint_1.html

...Though the NYSE has opposed internalization in the past because it takes order flow away from the price discovery process, brokers are using their own internalization engines or dark pools to match trades away from the exchange. “We want to repatriate liquidity back to the exchange and we want to centralize that where it makes sense,” says Ross...
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This is happening industry wide in every asset class.

nitro
 
I am taking a wait and see approach towards this whole reserve/hideden thing on the NYSE. I don't think it is the end of the world, we've been dealing with it for years on the ECNs, but obviously it could prove to be a real pain in the ass having jokers refreshing on the specialist too. The floor guys have this options now I believe with their hand-helds but giving it to everyone will add that extra layer of 'challenge' to every trade.
Oh well, who knows , could be a great opportunity, we'll see.

Auto
 
Yeah hopefully blocks of stock will still be around on the book. It just seems like everything is getting more and more fragmented. Way too much 100 share BS - bring back the good ole' for us old timers, lol... I really don't like the idea of these 'darkbooks.'



-Guru
 
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