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U.S. Securities and Exchange Commission

SEC Approves NYSE Hybrid Market Proposal


Washington, D.C., March 22, 2006 — The Securities and Exchange Commission today approved the New York Stock Exchange’s proposed Hybrid Market. The Commission’s approval of the Hybrid Market proposal enables the NYSE to integrate its traditional floor-based auction market with enhanced automated trading functionality.

“The Commission supports the markets’ adoption of new trading systems and new technologies in order to deliver improved service to investors,” said SEC Chairman Christopher Cox. “At the same time, with our major exchanges now responsible to their public shareholders for performance, the SEC is redoubling its focus on investor protection, to ensure that competition among markets is conducted on the basis of what’s best for the investing public.”

Significant changes to NYSE’s market structure under the Hybrid Market model include:

  • Expanding NYSE’s automatic execution facility, Direct+, so that it will accept more order types and allow executions to occur against liquidity that is priced outside the NYSE’s best bid or offer.
  • Automating participation by NYSE floor members so that they can electronically provide liquidity that would be available for automatic executions.
  • Allowing specialists to create proprietary algorithms so that they can electronically quote and trade. These algorithms should enable specialists to continue to fulfill their obligations to the market in an automated fashion.

The Commission recently extended a pilot program that has allowed NYSE to begin testing some of the many systems enhancements that must be made to enable NYSE to switch to the Hybrid Market. Upon approval of the Hybrid Market, NYSE will begin a phased rollout of all of the necessary systems changes. The rollout of the Hybrid Market will occur over a period of several months. NYSE will notify the public of its roll out status on its web site, at www.NYSE.com.

The Commission’s order approving the proposed rule changes is available on the Commission’s Web site at http://www.sec.gov/rules/sro/nyse/34-53539.pdf.



Modified: 03/22/2006