NYSE Euronext, dealing with a deterioration in the quality of fills on NYSE Hybrid, hopes to tweak some of the rules governing trading there in order to increase quote competition.
The Big Board is in talks with the Securities and Exchange Commission to win approval for a move to make it easier for its primary market makers (also known as “specialists) to better the market’s best quotes on incoming orders and provide more liquidity.
With the advent of hybrid, price improvement rates have decreased while volatility has increased. The double whammy has upset broker-dealers used to a more stable marketplace and better-priced fills.
The changes have caused NYSE Hybrid to look more like an ECN, undifferentiated from its fully electronic competitors. Such factors may also be contributing to an ongoing decline in the Big Board’s market share, a fact that has upset Wall Street analysts.
Speaking to analysts recently, Duncan Niederauer, NYSE Euronext president and co-COO, said he was in talks with the SEC and expected a “minor” change to the rule set. The decline in price improvement is “not necessarily good for market quality,” Niederauer said.