ICI Comments on Proposed Changes to NYSE's XPress System

Washington, DC, April 16, 2004 - The Institute recently commented on an NYSE-proposed rule change that would provide that Institutional XPress orders be executed immediately against an XPress eligible liquidity bid or offer and not be exposed for price improvement.

Background
The NYSE's Institutional XPress system was created to facilitate the ability of institutional investors to trade large orders on the Exchange. In particular, Institutional XPress would provide that XPress orders, defined as an order of at least 25,000 shares to be executed against a displayed XPress quote (a published bid or offer of at least 25,000 shares that is displayed at the same price for at least 30 seconds), be executed without the risk of being broken up by other market participants.

ICI Position
The Institute has made numerous recommendations to the NYSE over the past three years aimed at improving its Institutional XPress and Liquidity Quote systems. Most significantly, the Institute recommended that the NYSE make XPress orders ineligible for price improvement. In its most recent letter, the Institute commends the NYSE for taking steps to begin implementing greatly needed changes to increase the automatic execution of orders and for moving towards an environment in which investors can more effectively reach liquidity beyond the Exchange's best bid and offer. The Institute also is hopeful that the current proposal will provide incentive for funds and other investors to place more limit orders on the Exchange and urge the NYSE to continue to consider other recommendations to improve its trading systems.

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