-Through Rule"> The NYSEs filing with the SEC contained 27 specific details of how trading would be handled under an expanded Direct+ program. The exchange appears to be doing what it can to allay concerns and build confidence in the hybrid market. Good news for IT providers to the exchange: The existing system will require significant changes and enhancements that will take some time to deliver. According to industry insiders, the push toward an expansion of Direct+ is being welcomed by the industry, albeit with three key areas of comments. The first area of comment involves the liquidity replenishment points. These are the points that are triggered by the formula wherein the specialist can step in and replenish liquidity. There are delays cited between 5 and 10 seconds when a LRP is invoked.Can "exotic" equities pay off for online brokers? Click here to read more. Another area that has garnered comment is the broker agency interest file. This is the provision that lets the floor brokers post orders outside the best price available that they, at their discretion, can choose to display along with the other orders. "This provision will bring up questions about transparency," Cline said. "I think the SECs Reg NMS proposals are designed to foster transparency, so the concept that there can be hidden orders with the floor brokers will generate comment." Opponents of the trade-through rule will be dismayed to learn that, despite all of the innovation underlying Direct+, there was renewed defense for the trade-through rule in the context of the new hybrid structure. Cline finds this clinging to the trade-through rule puzzling since the proposed changes to Direct+ will position the NYSE well to compete as a "fast market" on a level playing field with other electronic exchanges. In February 2004, the exchange submitted its original SEC filing to expand the NYSE Direct+ service. A supplemental filing was issued in August. The NYSEs latest rule filing and related information are available here. Check out eWEEK.coms for the latest news, views and analysis on financial applications and services for the enterprise and small businesses.
Accentures Cline said, "I think the challenge on this one is to rationalize these pauses and determine how frequently theyre likely to occur with the typical fluidity with which electronic trading occurs." Cline said he thinks it sounds like specialists will receive automated tools so that they can replenish liquidity through an API rather than manually.