NYSE to Propose Creating Its Own Electronic Trading System

The move could put the exchange in a position to compete with after-hours trading systems.
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The

New York Stock Exchange

will propose creating its own electronic trading system, NYSE Chairman Richard Grasso said on Friday.

The move could put the exchange in a position to compete with after-hours trading systems. The alternative systems have gained popularity with investors for offering quick access to prices and with stockbrokers for offering low execution fees, allowing them to pocket a greater portion of their commissions.

The exchange's proposed system would dispense on the Internet to brokerage customers information previously available only on the floor of the exchange and allow member firms to execute electronically trades of 1,000 shares or fewer.

"Among the benefits to retail investors will be fast, low-cost, reliable executions, access to enhanced information, and extended-hours trading in NYSE stocks with NYSE safeguards," Grasso said in a speech to the

Securities Industry Association

in Boca Raton, Fla., according to a release from the NYSE.

The proposed changes would not allow investors to send orders directly to the floor.

And the changes themselves still face hurdles. Grasso did not specify price changes, a key factor in making the new system appealing to brokers.

Grasso's remarks do not signify a decision to adopt after-hours trading, an NYSE spokesman said.

"In the event that the final determination is to go to after hours, it gives us a platform," said Richard Adamonis, spokesman for the exchange.

If filed, the proposal would require the approval of the

Securities and Exchange Commission

. The exchange said it would file a request to change its rules by the end of the year. An SEC spokesman declined to comment until the agency receives a proposal.

A spokesman for

Instinet

, an after-hours trading system, said his organization was still studying the remarks. Bernie Madoff, of

Market XT

, said he wouldn't consider the system Grasso described a competitor because his system executes orders of 5,000 shares or fewer. The after-hours systems do not deal in Big Board stocks.

SEC Chairman Arthur Levitt spoke at the same gathering Thursday, urging competition among markets and transparency of pricing.