NYSE Steps Toward Future

The New York Stock Exchange formally unveiled plans Monday for a new "hybrid market" that Big Board officials say will put a human touch on electronic trading.

The plan is an attempt by Big Board officials to satisfy a demand from traders for faster execution, while seeking to mollify the exchange's seven specialist firms and their legions of floor traders.

The proposal, which has been in the works for months, must be approved by the Securities and Exchange Commission and could take several years to fully implement. But the proposal means that the NYSE's historic trading floor, one of the world's last face-to-face stock markets, will become far less important in the future.

"What we have not offered to a sufficient degree is speed," says Big Board Chief Executive John Thain. "We're marrying the best of the electronic trading with the auction market."

If adopted, the plan would mean that many buy and sell orders submitted to the NYSE will be processed electronically, without any specialist or human intermediary playing a role in completing the trades. Currently, just 10% of the trades on the Big Board are executed electronically using the exchange's three-year-old NYSE Direct system.

The lion's share of the trading on the NYSE is still done the way it has been for more than two centuries, with traders muscling each other for position, frantically waving their arms and screaming at the top of their lungs, trying to get the best price on a stock.

In the proposed hybrid market, the role of the specialists and floor brokers would be limited to handling trades at times of high volatility or low liquidity in the market. On most days, specialists would handle much of the trading during the opening and closing sessions of the market, which are the two most active periods on the Big Board.