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April 1, 2002

At Deadline

By Editorial Staff

NYSE Records

*A pending rule change with the Securities and Exchange Commission would require Big Board members to keep more detailed and comprehensive records. An amendment to Rule 132, as well as the adoption of Rules 132, A, B and C, would require New York Stock Exchange members to record every detail of electronic orders sent to the exchange, prepare an execution report and turn it into an exchange data base.

The rule change, designed to improve the ability of members to monitor transactions and keep more extensive records, was pending with the SEC as Traders Magazine went to press. If approved, the exchange would give members six months to meet the new standards. The proposed rule is designed to ensure that there is a more effective way of tracing transactions in an age in which security concerns have become more and more important.


*Three regional exchanges have scored a regulatory victory. The Boston, Chicago and Cincinnati stock exchanges, along with other exchanges, will still have unlisted trading privileges to quote stocks on the Nasdaq SmallCap market. This means, Nasdaq officials said, that these exchanges will be able to offer their quotes within the Nasdaq feeds. Nevertheless, Nasdaq officials said that one policy is unchanged: SuperSoes can continue to ignore quotes from UTP participants who refuse automatic execution. This SuperSoes pilot program, which had been slated to end on Feb. 28, has been extended to May 31. Nasdaq officials said the deadline was extended so they can have a better measurement of the pilot's effectiveness.

Boston Bid

*The Boston Stock Exchange, later this year, is expected to offer a proposal for a new electronics options exchange. The exchange, which would be called the Boston Exchange Group (BOX), will be formed along with the Interactive Options Group and the Montreal Exchange, according to a Boston Stock Exchange spokeswoman. She said that no exact date has been set to file the proposal with the SEC, but it should happen in the next few months.

BOX would be the second electronic options marketplace in the United States after the International Securities Exchange (ISE). Some of what BOX will trade includes equity indexes, exchange traded funds and single stock futures. Part of the move by the Boston Stock Exchange is stimulated by competition from the ISE. It has had explosive growth since its launch in the middle of 2000. It is now the third largest of the five U.S. options exchanges. BOX, which is hoping to begin operations sometime later this year, will also offer contracts on the 100 most actively traded equity positions.

More Options

*The U.S options exchanges are expected to be linked electronically beginning in the spring of 2003. Testing of the linked system is slated to begin in December, with the new system operational by the end of April 2003. The goal is ambitious and is by no means guaranteed, officials of the exchanges agreed. That's because the process is complicated.

It will mean connecting every exchange to a central processor. Ensuring that this works effectively is a risky proposition, exchange officials said. Some have complained that the Chicago Board Options Exchange will delay the process because its technology is old.