NYSE American Marketplace Opens
Three, two, one. Liftoff – and the market has started.
The New York Stock Exchange officially opened its NYSE American exchange on Monday, July 24th. The exchange was formerly known as the NYSE MKT Exchange. The marquee feature of the new and rebranded American will be its 350-microsecond delay upon order entry, proprietary data and outbound routing. The market also will offer a Discretionary Pegged Order.
Rival exchange IEX already incorporates a similar type delay mechanism and CHX is planning to do the same.
According to a release on the NYSE website, NYSE American will be a first-of-its-kind exchange that brings the strengths of NYSE’s features, such as electronic DMMs with quoting obligations assigned to each NYSE American listed company. NYSE American will also file rules with the SEC for new features that promote midpoint trading, including the 350 microsecond delay.
Said Tom Farley, NYSE President: “As U.S. equity markets have become increasingly complex due to fragmentation and dark pools, we are committed to providing listed companies, investors and market participants with more choice on how they list and trade with us in a way that best meets their needs. As we enter our 225th year as the global leader in trading and listings, we are continually evolving our markets to serve our customers in a very dynamic marketplace.”
Farley continued, “As we move through 2017 and begin offering these enhancements, NYSE Group will ultimately operate four distinct exchanges for issuers and investors, each with its own market model. We recognize certain market models are appropriate for ETFs or less liquid securities, and we are excited to provide our customers with more choice in how they list, invest and trade.”
In looking at NYSE American, Jonathan Clark, CEO of the buy-side only ATS Luminex, started by firms such as Fidelity, Black Rock and State Street, told Traders Magazine in an interview that he welcomed the new marketplace but it could take time for the buy-side, via its brokers, to connect and use the new exchange as well as measure its success.
“I was on the buy-side for 25 years – as a trader, managing desks – and I understand the knee-jerk reaction that some could have from a fragmentation point of view,” Clark began. “But this is a unique opportunity for innovation to solve a market problem. It’s interesting that NYSE was so skeptical of the IEX delay feature and has now come around to have their own latency model.”
It’s a case of ‘if you can’t beat them, join them’ mentality.
Clark added that this new market model – American – and other market-based solutions, rather than government mandated fixes, are best for the equities markets.
“The NYSE can now use one of its own exchanges as an incubator to test this solution,” Clark added. “The market will ultimately determine the success or failure of each, but they are technology-driven solutions to the challenges investors face – like Luminex itself was – which is a sign of a healthy market.”
But traders and market observers shouldn’t expect an instant and measurable indicator of NYSE American’s validity or performance.
“And we’re not talking about viewing stats at the end of the day, week or in a month,” Clark said. “I’m excited to see what happens, but it will take some time to see how the solution plays itself out.”
Contracts will be based on Bloomberg Barclays MSCI Global Green Bond and Euro Corporate SRI indexes.
Nearly a dozen retail brokers have joined to evaluate how market infrastructure and rules should evolve.
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Clients will have the ability to interact with a larger liquidity pool while minimizing market impact.
The exchange's derivatives segment will close for trading on Friday 28 January 2022.