UPDATE: NYSE Euronext Cuts Order Trade Execution Times 20-Fold
01 Luglio 2009 - 10:08PM
Dow Jones News
NYSE Euronext (NYX) slashed order execution times 20-fold at the
New York Stock Exchange, part of an effort to catch up to faster
competitors that have taken market share.
With the implementation of a new system for processing orders on
the NYSE, customers will see trades executed within five
milliseconds, compared with 105 milliseconds previously. As
recently as 2007 the time was 350 milliseconds.
That change is huge in the realm of high-frequency trading
firms, which now measure time by the microsecond, or one-millionth
of one second.
But even after the speed boost, NYSE Euronext continues to lag
rival Nasdaq OMX (NDAQ) as well as new electronic platforms BATS
Exchange and Direct Edge, streamlined venues that have attracted
algorithm-driven investment firms and proprietary trading groups
with a combination of fast executions and attractive pricing.
"For [competitors] who have come into the market recently, the
barriers of competition are low, so they can come in with the
newest technologies and without a lot of the constraints of running
a big market," said Louis Pastina, head of NYSE Operations, in an
interview.
"This allows us to be very competitive, on a latency basis, with
most of our competition."
While NYSE Euronext has juggled fees to stay competitive, it's
also counting on new technology to draw traders, with the new order
processing system replacing its 33-year-old SuperDOT platform. The
trans-Atlantic exchange operator is also building a new low-latency
network for data centers in New York and London.
The moves aim to reassert NYSE Euronext's dominance in U.S.
stock trade, badly dented by intense competition in recent
years.
This month saw the exchange's share of U.S. equities trading
slide to 29%; in March 2008, it had half the market.
Chief executive Duncan Niederauer this year targeted a 50%
market share in stocks listed on the NYSE, a goal he has
acknowledged as "aggressive"; in late June, NYSE Euronext claimed
about 39.9% of trade in so-called Tape A securities.
Alex Lamb, head of business development for RTS Realtime Systems
Group, said the push for speed will raise NYSE Euronext's profile
among the high-frequency trading outfits his company serves.
"My view is it's going to attract traders back," he said.
NYSE Euronext's markets claim about 15% of the order flow from
clients of Lightspeed Trading LLC, another direct market access
provider for high-speed traders, and chief strategy officer Andrew
Actman said that number could grow if clients see faster execution
times.
"Every microsecond in their world can potentially equate to
getting a better fill, and better profitability," Actman said.
NYSE Euronext will also promote its trading floor, which has
lost much trading volume to electronic trading, but can help damp
volatility when markets are under stress, according to
officials.
"As venues progress toward zero latency, the content of the
marketplace will become more important," said RTS's Lamb. "NYSE and
Nasdaq offer a broader portfolio of services than other venues, so
to maintain their position as a place of trade absolutely makes
sense."
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com
(Kevin Kingsbury contributed to this story.)