BOFA unable to profit from hybrid market

Discussion in 'Wall St. News' started by WallstYouth, Nov 4, 2006.

  1. One of the largest specialist firms on the New York Stock Exchange is coping with a technology disaster that threatens to relegate it to dead last among the Big Board's market makers.

    Bank of America Specialists, the third-largest market maker on the floor of the NYSE, is not trading a single stock yet in the new hybrid market - a highly automated trading system that allows buyers and sellers of NYSE stocks to be matched electronically.

    Despite BofA Specialists' spending more than $13 million and a year and a half implementing technology that would work with the hybrid market, the firm is seen as lagging its floor trading rivals, including LaBranche and Goldman's Spear Leeds unit.

    What's more, prior to the Sept. 30 hybrid market test run, BofA Specialists dismissed the technology executive in charge of leading its effort, according to a firm veteran.

    The hybrid initiative is the NYSE's answer to the speed and efficiency of trading stock at all-electronic regional exchanges and the Nasdaq.

    Specialist firms that do not have an active hybrid presence will likely lose out on millions of dollars in revenue.

    According to a document obtained by The Post, of the NYSE specialists handling the 106 stocks now trading in the hybrid market, BofA Specialists didn't handle any.

    This week, as more than 150 stocks begin trading in hybrids, the firm will make a market in a single stock.

    A BofA Specialists spokesman declined to comment on the specifics of its hybrid trading status.
  2. payback time
  3. Fractal


    So... specialists are then more profitable in adapting to the hybrid system? If I am reading this right...

    Specialist profitability has an inverse relationship to our own profitability, at least as far as traders who are not receiving large order flow are concerned, which I assume is like 99.9% of the people reading this site.
  4. I'm sure they don't care about the NYSE. They've had a computer in SF handling all the retail flow for a while. Rumor is they are killing that flow. In the long run, I doubt they care too much about the floor operation vs. the upstairs operation. Upstairs supposedly banging pretty hard $$$.

    Plop out Instaquote to all their checking account holders and internalize the flow instead of sending to the NYSE??? Seems like a win win situation for BOFA, IMO. Who cares about the NYSE operation making a few million a year, LOL!!!! Those zero's they produce are pretty small to the billions the firm does already in its main line of business- Banking.