The market for Nasdaq-listed securities is about to get more fragmented.
NYSE Euronext announced this week that it would begin trading Nasdaq stocks on its NYSE Amex platform on July 12. The Securities and Exchange Commission has not yet given its formal approval, but the proposal received no pushback when the regulator sought comment this spring.
NYSE Euronext says it expects to have "limited market share" with "lower volume and less liquidity" in Nasdaq stocks than its Amex-listed securities. Still, the addition of one more trading platform is expected to splinter trading in those names further. Thirteen of the 15 exchanges and ECNs currently trade Nasdaq stocks with only one–Nasdaq itself–having more than a 25 percent share. Most have less than 12 percent and much trading is done within brokerage houses off-board.
Amex will roll out selected Nasdaq securities in stages over several weeks with each security assigned to a single designated market maker, formerly known as a specialist. NYSE Amex expects designated market makers operating at sister exchange NYSE Classic to also sign on to trade Nasdaq stocks. They will be allowed to trade both NYSE and Nasdaq names at the same post, but must maintain separate staff for the trading of NYSE names.
(In the past, NYSE Euronext has said it will not trade Nasdaq stocks on its NYSE Classic platform as it wants to reserve trading for its listed companies.)
Trading in Nasdaq securities at NYSE Amex will be conducted much as trading in Amex securities, except there will be no opening or closing auctions. Nasdaq stocks will open at 9:30 am based on a quote from the designated market maker. The closing price will be based on the last sale.