The New York Stock Exchange said it expects the Securities and Exchange Commission (SEC) to approve its request to conduct a pilot for phase one of the Hybrid Market initiative. Pending SEC approval, the NYSE will begin the pilot in 200 securities today, Dec. 15, according to an internal memorandum from the NYSE’s Market Surveillance Department obtained by Wall Street & Technology. (Click here to view the complete NYSE Member organization memo).
Initially, the pilot will be rolled out in a few securities at a time to make sure it works smoothly, the memo said. Signs will be posted on the trading floor to show securities in which the pilot has been implemented.
“The pilot will allow member firms to gain practical and essential experience with new systems and processes in a controlled and well- modulated way,” stated the memo. “In addition, the Pilot will contribute to the exchange’s ability to comply with the implementation for Regulation NMS.”
During the pilot, NYSE Direct+, the exchange’ s automated execution system, will continue to operate and will be subject to the same availability, conditions and restrictions. However, some of the new Hybrid features that will be implemented during the pilot include the NYSE floor broker agency interest files, also referred to as e-Quotes, including the reserve feature will be activated. This permits floor brokers to enter e-Quotes in pilot securities. Floor brokers will be able to electronically represent their agency orders at multiple price points at and outside the exchange’s best bid or offer. In addition, specialists will be able to manually layer their interest at and outside the best bid and offer through the use of NYSE Specialist Interest Files, also referred to as s-Quotes.
The pilot will last for 90 days or until the SEC approves the NYSE’s Hybrid Market filings, whichever comes first, the memo said.