The Securities and Exchange Commission has approved the New York Stock Exchange’s (NYSE) application to implement a set of initiatives designed to improve performance in an “increasingly electronic trading environment”.
NYSE Euronext, the exchange group that owns the NYSE, the programs will create lower price volatility, smaller spreads between best bid and offer, greater price improvements and deeper liquidity overall.
Under the strategy, Specialists will become Designated Market Makers (DMMs), accountable for providing liquidity and improving access to capital and risk-management.
They will also participate in trading under an obligation to maintain an orderly market and quote at the national best bid or offer a specified percentage of the time.
Furthermore, the NYSE will begin a pilot program to establish Supplemental Liquidity Providers as a new class of “upstairs, electronic, high-volume members” that will be incentivized to pump liquidity into the exchange.
SLPs, which will be barred from trading for public customers or agencies, are designed to increase competition among quote providers.
NYSE Euronext says the introduction of SLPs and DMMs should be complete by November.
In related news, NYSE Euronext confirmed the listing of 21 new Exchange Traded Funds controlled by Claymore Securities on its NYSE Arca electronic trading platform.
D.C.