The New York Stock Exchange plans to reduce the role of its massive network of specialists and floor traders by implementing an expanded electronic trading network formally known as "the hybrid market."
Big Board Chief Executive Officer John Thain in a statement on the exchanges Web site downplayed the likelihood that the new system will minimize an almost 200-year-old institution of human traders. Instead, he touted the new system as a marriage of technology and human experience.
"The hybrid market will strengthen the integrity and fairness of our market by marrying the best of electronic trading and the auction market in a way no other market can match," he said. "As we increase electronic trading, we want to preserve the unique advantages of the auction system.
Under the proposed system, the Big Board will shift more stock orders toward its proprietary electronic trading system formally known as "NYSE Direct+." Industry exerts suggest NYSEs decision to rely more heavily on computerized trading was prompted by increasing competition from the automated Nasdaq exchange and efficient electronic trading firms like Instinet Group and Archipelago.
NYSE intends to phase its three-year old Direct+ system, which is still in a relative testing phase, into widespread deployment within the next year, but the move must first be approved by the Securities and Exchange Commission.
Successful steps toward fully implementing its "hybrid market" will significantly raise the NYSEs total number of electronic trades from 10% of its daily volume and remove a limit of 1,099 shares for fully computerized trades.