WASHINGTON--The Securities and Exchange Commission on Thursday
approved a New York Stock Exchange initiative to lure retail
investors with more-favorable prices than they would otherwise get
by trading with an exchange.
Under the 12-month pilot initiative, called the Retail Liquidity
Program, the Big Board becomes the first U.S. stock exchange
allowed to offer retail, or individual, investors a better
price--sometimes as little as a 10th of a penny higher or lower,
depending on the transaction, than those available to institutional
investors such as pension funds and hedge funds.
The NYSE program works along the same lines as "dark pools" that
trade large blocks of shares for institutions. Dark pools are
private platforms set up for anonymous stock trading.
Handling individuals' stock trading is prized as a source of
short-term profit, and mainly flows through a handful of banks and
electronic-trading firms that pay fees to retail brokers for the
chance to fill stock orders before they arrive at exchanges.
In some cases, those firms execute trades at prices that beat
the going market rate by fractions of a cent, something exchanges
have previously been barred from doing.
Write to Andrew Ackerman at andrew.ackerman@dowjones.com and
Jacob Bunge at acob.bunge@dowjones.com