DJ NYSE Hides Names Of Stock Buyers And Sellers From Traders

Discussion in 'Wall St. News' started by USAtrader, Jan 26, 2011.

  1. =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

    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

    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;

    -Jessica Holzer contributed to this article.

    (END) Dow Jones Newswires

    01-26-11 1540ET

    Copyright (c) 2011 Dow Jones & Company, Inc.