NYSE+Monopoly power=new fees

Discussion in 'Trading' started by crazydiamond, Sep 5, 2006.

  1. Is anyone else feeling a bit concerned now that the NYSE is a for PROFIT corporation that they will seek to maximize profits for such things as Open Book? Open Book used to cost 50$ (an arbitrary number) and recently went up to 60$. Is this a sign of the future? Who's to say it shouldn't cost 500$ a month? If prices are not based on cost (non-profit corp.) but are part of a profit maximization model then where are the limits? i.e. however much they can bleed from us
  2. Make no mistake. "Non-profit" companies maximize profits just as much as "for-profit" companies. The only difference is that "non-profit" companies reinvest all of their profit back into the company. They are essentially the same as every other company that does not pay dividends.

  3. Ray- that may be true if you were selling beads to save the trees. However, the NYSE was a monopoly(natural) for so long that our trading institutions have been built around it, leading to its dominance in order flow. Now they are going to be able to capitalize on that previous, albeit precarious, status as a non-profit monopoly. Open Book is pretty much BS most of the time now anyway, but I still like to have it.
  4. last I looked the regionals were all being bought up to compete w/ the NYSE. Also NDAQ is gaining share of NYSE listed stocks.

    Not exactly a monopoly. Perhaps prices will DROP in the future.

    P.S. nice to see the restrictions on sweeping the book removed.

    Hybrid Clean-Up' Feature Never Sees Light of Day
    Peter Chapman

    The New York Stock Exchange's hybrid marketplace is starting to look just a little more like an ECN.

    In response to trader complaints, the Big Board is ditching a key design feature of its new half-manual, half-electronic business model.

    Incoming orders that sweep its book at various price levels will no longer fill at just two prices: the market's best price and a so-called "clean-up" price. Instead, they will execute at each price they sweep.

    The move by the New York comes after traders said they would not sweep the book if their executions were to bypass several price points.

    "This is a positive development," Kyle Zasky, president of institutional brokerage EdgeTrade, said.

    "We were not going to encourage our clients to put in these sweep orders if they were not going to get the advantage of all the pricing in between the market and their limit."

    The New York's original plan would have differentiated trading on its book from trading on an ECN partly by use of the clean-up price.

    Rather than allow less-than-best-priced limit orders to trade at their posted prices as on an ECN, the New York offered limit order traders the possibility for price improvement.

    Under the clean-up pricing scheme, an incoming order might sweep a range of orders before filling. The price of the final order swept was termed the clean-up price. The incoming order would execute at just two prices: the market's best price and the final clean-up price.

    Those displayed limit orders priced worse than the best price, but better than the clean-up price, would execute at the clean-up price.

    They would, in effect, receive price improvement. The plan was an attempt to mimic electronically the way trading is done on the floor of the exchange.

    A sell limit posted at $20.10, for instance, when the best offer was $20.05, might trade at $20.15 if an incoming buy order swept up to $20.15.

    That might be good news for the limit order, traders told the exchange, but not for the incoming order. The buyer in this example would pay more for his stock.

    Traders told the New York they wouldn't use this sweep functionality. They would "walk the book" instead, or pick off each price level with individual orders.

    "Rather than build a product that is not responsive to customers needs," the New York said in a recent memo, "the NYSE is redesigning the hybrid market sweep."

    The changes will also result in a simplification of the hybrid's circuit breakers, which are known as liquidity replenishment points (LRPs), according to the Big Board. There are two LRPs now. They will be merged into one.

    (c) 2006 Traders Magazine and SourceMedia, Inc. All Rights Reserved.
  5. How does "non-profit" status have anything to do with monopoly status? Was Standard Oil (a monopoly) a "non-profit"? Is Red Cross a monopoly?

    The merit of monopolies can certainly be argued, but to refrain from worrying about "non-profit" companies as monopolies until they become for-profit companies is just silly. The profit status of a company has no bearning. If you are worried now then you should have been worried when they were "non-profit". It changes nothing.

  6. Concerned about sweeps, fees
    By: Ray Pellecchia
    File Under: HybridTalk
    1 Comments Email Entry A reader writes:

    With 500 or more traders, many of whom provide liquidity on the NYSE because we receive price improvement...we are very concerned about the sweeping of the book. As of this time, we are advising our traders to seek other locations for resting their orders.

    This combined with the new charges forced upon us by the NYSE makes it so we will be trading our shares on ECN's.

    Something has got to change.

    Don Bright
    Bright Trading, LLC

    Mr. Bright -- Thanks for writing. I appreciate your candor.

    In the full Hybrid Market, floor brokers will provide execution opportunities through their Discretionary e-Quote function via their hand-held device. That capability will provide orders that may have set a new bid or offer with the opportunity to trade immediately without becoming the new best bid or offer.

    In addition, orders that are supplying liquidity will also have the opportunity of price improvement through auction- style sweeps initiated from the trading floor, in which the sweep includes an execution at the inside price and then an execution at the clean-up price. Orders residing on the book for these block trades will receive the clean-up price, and thus price improvement. So not posting on NYSE could result in missed opportunity.

    Only in the case of electronic sweeps were changes made to the execution rationale. In those cases the sweep will "walk the book" at each price point. While that is a change from our initial proposal, it is responsive to customers who indicated that they would prefer the way that sweeps are handled in other markets. So we will be like those other markets on electronic sweeps, with the difference being our auction component.

    On the fee issue, our goal with our recent, initial fee changes was to make our fees more transparent, simplified and equitable across our customer base. We've noted publicly that our fee structure will continue to evolve, and of course we want to encourage the provision of liquidity. We will take your input into account.

    I know I'm a bit biased on this, but I suggest patience. You haven't experienced the full Hybrid Market yet; I encourage you to try it out before making a decision.

    Tags: [New York Stock Exchange, Hybrid Market, NYSE, NYX, specialists

    Ray, I agree with the fella from Bright Trading about the fee increase. The new fee structure of .25 is really hurting our business. More and more traders are looking to get thier orders done away from the NYSE to avoid this costly fee. Many of the big trading firms are also looking into doing business at other exchanges. The new fee increase is just driving business away from the NYSE. I really hope that something is done about this. Thank you.

    by tony dey on September 5, 2006 11:36 AM
  7. Another NYSE edge bites the dust....
  8. mcelitetrader

    mcelitetrader ET Sponsor

    Fee of 25 cents per thousand shares....? I am unable to find any writing on this fee increase.....any help is appreciated.

    When does it start? does it hit if i use ecn's? questions questions....
  9. #10     Sep 7, 2006