Commentary

Derek Edward Schloss
Traders Magazine Online News

What the !@#$ is a Security Token?

In this first part of a series, Mr. Schloss will begin to explain what a security token is by explaining how the building blocks of securities law are fundamental to understanding the tremendous value security tokens will one day unlock.

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February 24, 2006

What's Driving the NYSE's Hybrid Strategy

By Peter Chapman

In the aftermath of Department of Justice's approval of the New York Stock Exchange/Archipelago Exchange merger, many wonder why the Big Board needs its hybrid plan. Why not just offer traders automatic executions via Arca instead of retrofitting the Big Board?

NYSE exec Bob McSweeney answered this at a recent Security Traders Association event.

"It would be extremely easy for us to have two separate models running side by side... But the purpose of getting so complex was because we want to continue to aggregate that liquidity. So that those who are accessing the market for automatic execution have the benefit of accessing liquidity that is resident with the floor broker. The broker can choose then to scale that interest in an agency interest file, a blind file. Then the order may not sweep up four cents. It may only sweep up two cents because that is resident liquidity within the auction that would not otherwise be available to the auto-ex market. Also, the floor brokers themselves would not miss the market when representing large orders as an auto-ex order sweeps through an ECN-like platform."