Q&A: Phase III impact

By: Ray Pellecchia

File Under: NYSE, NYSE

• 2 Comments
• Email Entry

A reader writes in response to Phase III dress rehearsal on Sept. 30:

Ray,

Having a dress rehearsal, does it seem this phase is going to have the biggest effect on the trading community?

-- Jeff

Jeff -- To me, picking a phase that has the biggest impact is a little like picking a favorite child; they all seem important. Also, it depends on where you sit: if you're a trader who uses a floor broker, you might think that Phase I, which introduced NYSE e-Quotes, is most important.

But stepping back and trying to think about impacts on the trading community as a whole, you're right: Phase III, which begins a gradual rollout on Oct. 6, is the biggest enchilada.

Phase III will introduce a number of important features, including:

• NYSE Direct+ modifications, including increasing the eligibility to 1 million shares from 1,099; removing the frequency restrictions; and accepting market orders in addition to limit orders; note, in this phase, all marketable orders will be treated as NX (auto-ex), so there is no requirement to mark them that way anymore

• Discretionary e-Quote for floor brokers, and by extension their customers

• Sweeps, as re-defined here

• Liquidity Replenishment Points, also as re-defined; click on link in "Sweeps" bullet, immediately above

• Automated linkage to ITS

There are other features as well; watch this space for more. Thanks for writing, and sorry for not getting back to you faster.