NYSE Taps Nunami Services As Back-Up Provider for Reg NMS Outbound Routing
NYSE Euronext went live with Nunami Services, LLC as a back-up provider for Reg NMS outbound order routing services for a portion of its order flow, namely for the NYSE and the Alternext (formerly American Stock Exchange) equity trading floors.
NYSE Euronext selected Nunami as a secondary provider because Reg NMS requires that exchanges route orders if there is a better price on another displayed market.“The SEC has stated that in the event that a primary market cannot reach out to any of the protected quotes, it would have to take itself out of the market,” said Mike Paulyson, managing director of NYSE Floor Operations.
NYSE Euronext uses an inhouse facility that is based on the Arca routing technology as its main router today, explained Paulyson. “In the event that the NYSE had trouble with Arca routing facility, it would route outbound orders through Nunami, said Paulyson.
If the NYSE's trading engine makes a decision to route to a better away- market, it can route through either the Arca router or Nunami. In fact, Nunami is operating all-the-time, to ensure that it can immediately take 100 percent of the flow if required. On a daily basis, roughly 15-to-20 percent of NYSE Euronext’s order flow in listed NYSE-equities is routed through Nunami to reach market centers, including those formerly known as 'regional exchanges.' "Arca is our primary router and they are direct members of most market centers, but they have their own network of third-party routers to access markets where they are not members. Selero/Nunami is a back-up to Arca in the event that they have an issue," said Paulyson.
The deal is a big win for Nunami Services, the Denver, Colo.-based broker-dealer arm of parent company Selero, whose technology it runs on, and could signal that there have been market share shifts among the Reg NMS compliant order routing services.
Nunami competes with Princeton, New Jersey-based Order Execution Services (OES) and Citigroup’s Lava, which are the other two outbound order routing service providers that many exchanges selected a few years ago to comply with Regulation NMS. About a year-and-a-half ago, OES and Lava were handling outbound order routing for all the protected markets and exchanges, noted an industry source. According to a story in Advanced Trading’s sister publication Wall Street & Technology that ran in June of 2007, OES
NYSE’s Paulyson didn't mention OES or Lava in the interview, but based on the selection of Nunami to handle outbound routing it appears that their role has been diminished. When asked if the exchange would hire additional back ups, he said, "We will only have one back-up," reiterating that its primary order routing facility will be through Arca, which is not a member of the regionals. He also said Selero now has the capacity to route for the full floor. “If we had a failure they could takeover the full floor routing,” he said. Nunami has memberships to all U.S. market centers protected under Reg NMS and many dark pools.
Paulyson said the primary reason for NYSE choosing Nunami was their technology. “We’ve been extremely pleased with the solution. They’ve been extremely quick and fast and working with their teams has been excellent. They’ve had to customize several for their applications for our implementation,” said Paulyson. The Selero staff maintains and monitors the status of the system remotely. Nunami’s solution is operated from a co-located facility within the NYSE’s data center. According to Paulyson, the NYSE phased in the deployment starting in August. "Part of the daily monitoring is to make sure that their connections to every market center are up and running," said Paulyson. "We then have the ability to dynamically switch routing through Nunami," said the NYSE floor operations executive.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Tweet This