- REUTERS/Mike Segar
- The New York Stock Exchange is renaming NYSE MKT, a market for small and mid-cap companies, NYSE American. The NYSE is planning to introduce a 350-microsecond delay in trading on NYSE American. The introduction of a delay follows the approval of the IEX exchange, which also has a 350-microsecond delay. The NYSE had fought IEX’s approval.
The New York Stock Exchange is planning to introduce a 350-microsecond delay in trading on its market for small-cap companies.
The delay will apply to NYSE American, the market previously known at NYSE MKT, and will be similar to the so-called speed bump introduced by IEX, America’s newest stock exchange.
The NYSE had lobbied aggressively against approval for IEX from the Securities and Exchange Commission, largely as a result of the speed bump. The NYSE said IEX’s speed bump would “result in the investors receiving stale and misleading quote information.” At one point, Jeffrey Sprecher, the CEO of the NYSE parent Intercontinental Exchange, said IEX was “un-American.”
IEX won approval, however. John Ramsay, the chief market policy officer at the new exchange, said in an op-ed article on Tuesday that “we have been operating as an exchange for over four months, and chaos has yet to descend on the world.”
The NYSE American trading delay is the second to be proposed since IEX won approval. In August, the Chicago Stock Exchange outlined plans to adopt what it calls a “Liquidity Taking Access Delay,” a 350-microsecond delay for those who trade against resting orders on the exchange.
It also follows the NYSE’s unusual decision to take aim at some of its biggest clients over their need for speed. In a letter to the SEC responding to criticism from the likes of Citadel, Wolverine Trading, and the trade body SIFMA, the NYSE said some of those firms had “chosen to build business models based on speed.”
Here’s the NYSE statement:
NYSE Group (NYSE), part of Intercontinental Exchange (NYSE:ICE), today detailed its equity markets strategy, which aims to deliver greater choice for corporate and ETF issuers and to investors by offering four unique exchange venues, including an exchange designed exclusively for small and mid-cap companies.
The group’s iconic New York Stock Exchange will continue to operate as the premium venue for corporate listings, and the only market to offer floor-based Designated Market Makers (DMMs) delivering the leading market quality and flawless IPOs. The floor brokers on the NYSE continue to act in an agency-only capacity, offering unique insight and access to the Parity allocation, which increases fairness and reduces dependence on speed, and the NYSE’s liquid closing auction. NYSE previously announced its plan to expand NYSE’s exclusive floor-based trading model to include all listed securities in the second half of 2017.
With its heritage as the American Stock Exchange, NYSE MKT, the market for small to mid-cap companies, will be known as NYSE American, following regulatory approval. NYSE American will be a first-of-its-kind exchange that brings the strengths of NYSE’s features, such as electronic DMMs with quoting obligations assigned to each NYSE American listed company. NYSE American will also file rules with the SEC for new features that promote midpoint trading, including a 350-microsecond delay upon order entry, proprietary data and outbound routing, as well as a Discretionary Pegged Order.
Said Tom Farley, NYSE President: “As U.S equity markets have become increasingly complex due to fragmentation and dark pools, we are committed to providing listed companies, investors and market participants with more choice on how they list and trade with us in a way that best meets their needs. As we enter our 225th year as the global leader in trading and listings, we are continually evolving our markets to serve our customers in a very dynamic marketplace.”
Farley continued, “As we move through 2017 and begin offering these enhancements, NYSE Group will ultimately operate four distinct exchanges for issuers and investors, each with its own market model. We recognize certain market models are appropriate for ETFs or less liquid securities, and we are excited to provide our customers with more choice in how they list, invest and trade.”
NYSE American will provide a unique, efficient market combining the benefits of electronic DMMs and mid-point trading strategies.