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May 26, 2005

NYSE Gets Ready for a Surge in Listed Volume

By Nina Mehta

NYSE trading volume could soon reach record highs as the introduction of the new trade-through rule takes effect. This increased volume would be triggered by new strategies and faster executions, according to the Big Board's chief technology officer. "Expect greater volumes and greater message rates," according to Roger Burkhardt. "Expect a fairly significant uptick in volume."

The current trade-through rule applies only to exchange-listed stocks. But it does not require quotations to be automated and immediately available. The new rule would apply to Nasdaq-listed stocks as well as exchange-listed stocks. The NYSE believes it meets the threshold for trade-through protection under its planned hybrid model, scheduled to begin on April 10, 2006.

"There is a 12-month implementation from the point at which we know what it is we're building," Burkhardt said at a recent conference. The NYSE will begin its hybrid system with 100 stocks. Currently, Direct+, the NYSE's automated execution system, trades between 120 million and 140 million shares daily.

Burkhardt indicated that the Intermarket Trading System will probably be preserved. Although ITS is intended to ensure investors get the best price, some have been frustrated by a slow response time. Burkhardt insisted that ITS, under the "new fast rules," will be effective. If there is, "any incoming [trading] interest, we'll provide auto-ex, and we'll route out to fast markets," he promised.