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Investing June 8, 2001
NYSE Takes Steps on Decimal Perceptions
June 8, 2001 (PLANSPONSOR.com) - Although it has
found no evidence that institutional customers are suffering
from the switch to decimal pricing, the New York Stock
Exchange (NYSE) will still implement some changes.
Reported by Nevin E. Adams
The new rules are designed to keep them from cutting ahead of public orders by making offers that are a penny more than the existing bid, otherwise known as “pennying’ or “stepping ahead.
NYSE Chairman Richard Grasso said the perception that large orders are at a disadvantage has cost the NYSE about 2% of transactions totaling more than 100,000 shares as customers move to other markets to fill those orders.
Penny “Saved”-
The first rule change limits a specialist’s ability to become involved in a stock transaction when the would-be seller and buyer are represented by the same broker.
The second rule change gives special priority to transactions over 100,000 shares, by allowing brokers more flexibility to complete a deal and by restricting a competing bidder’s ability to break up the transaction, according to Dow Jones. That should make it easier to complete a big trade at a single price.
The NYSE plans to ask the Securities Exchange Commission to make the first change permanent, while the second proposal will operate as a six-month trial.