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.
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.