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November 29, 2005

NYSE To Launch Hybrid Oversight Committee

By Gregory Bresiger

Buysiders are worried about how the new, untested hybrid NYSE will operate next year.

Will it drive business away? Will specialists aggressively use the new algorithm to take orders away from them? What will happen to their orders when the market goes from fast to slow and back? Will institutional traders lose out on liquidity because of the specialist's ability to improve price? Will the auto-ex functions of the plan destroy the livelihoods of many of the members?

These are some of the issues that have been raised by both plan supporters and critics who spoke with Traders Magazine.

So a new NYSE committee is being created for discuss hybrid issues. The committee will include buysiders, sellsiders, floor brokers and specialists, according to NYSE officials. They said the committee will "soon" begin operations.

"The committee," NYSE Senior Vice President Robert McSweeney explained, "will have the power to make policy recommendations."

It will be unlike the NYSE's ITAC committee, which can discuss any institutional trading topics. This new committee will only be concerned with the hybrid plan, a plan with numerous buyside critics.

"We were very concerned about the ability of the exchange to change different policies within the hybrid quickly and effectively," said a buyside executive who declined to be quoted by name.

"The committee will help the exchange determine if it is serving all the various constituencies and decide how much power each one will have," said the trading executive. The committee will be "advisory," he stressed. "It will not have the ability to implement policy," he said.