The human-based system used by the New York Stock Exchange should be eliminated in favor of an electronic system similar to that used by Nasdaq, Fidelity Investments told the Big Board Monday, The Wall Street Journal reports.
The specialist system, which the NYSE has used for more than two centuries, involves floor traders acting as the middleman for buyers and sellers. It is the only major stock exchange currently using that type of system. But Scott DeSano, who heads global equity trading at Fidelity, the nations largest fund company, said in an interview with the Journal that computers should be doing the business.
"Thats inevitably where we want to get," DeSano said. DeSanos main problem with the specialist system is that the specialists forget about investors and trade for their own good. Computers, he argues, wouldnt do that. With its trades constituting between 4% and 5% of the Big Boards daily trading operations, Fidelitys request probably carries some weight, according to the Journal.
The notion caused a major stir among specialists Tuesday, Reuters reports. "Fidelity is a monstrously huge mutual fund, and their statement is audacious and eye-popping. They are talking about doing away with the franchise of the specialists," Jefferies & Co. Inc. Analyst Charlotte Chamberlain told Reuters.