Hybrid System - Pros and Cons?

Discussion in 'Trading' started by listedguru, Aug 5, 2006.

  1. Anyone care to chime in with any pros and cons for the new hybrid system? I guess ready or not here it comes.

  2. dan05


    What do you mean by hybrid systems?
  3. Well it looks like the nyse has defined the LRP's for the new hybrid system. These are the points at which the market goes into manual or 'auction mode.' You can find the definitions under the hybrid section of the nyse (there's a pdf dated 8/23/06 - thats what you want). I thought they would just put a generic number on them such as .10 but they range from .10 to $1.00 or more depending on the volume and price of the stock, etc...

    I for one just hope that the liquidity stays on the book for listed stocks under hybrid and doesn't turn into a 'smoke and mirrors' kind of market.

  4. www.stocktrading.com/hybrid.htm for info.

    Also, the only change in methodology is that our traders (probably most traders from anywhere) will stop "booking" orders with the Specialist during the day. The new procedure will allow for "walking the book" each order, each penny, and rarely give price improvement. We will obviously send buys and sells vs. providing liquidity. If an ECN will pay us for NYSE liquidity, then we will route there.

    We have a "wait and see" attitude for the time frame of October 1, 2006 and February 2007 when the NMS rules take effect.

    I doubt the "smoke and mirrors" aspect, but since they are allowing Specialists to use algorithmic trading now, we'll have to see how transparent or "readable" that is.

  5. Well done on consolidating that info, Don. I'm sure a lot of other traders along with me appreciate it.