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.

Traders also will be able to bypass the electronic system and trade through a specialist in order to obtain a better-than-advertised price for a stock.

Thain, in a news conference, says the reforms are needed to preserve the NYSE's franchise and eliminate the possibility of the Big Board losing market share to rival electronic trading systems and the

Nasdaq Stock Market


"If we didn't respond to that customer base, they would pull their volume off the exchange," Thain says.

The plan, however, will mean big changes for the NYSE's seven specialist firms and probably will reduce their profit margins. Big Board trading firms likely will employ fewer people in the future, reducing job opportunities on Wall Street.

News of the NYSE plan depressed shares of




Van Der Moolen


, two publicly traded specialist firms. In midafternoon trading, shares of LaBranche fell 13 cents, or 1.6%, to $8.06, while Van Der Moolen declined 23 cents, or 3.6%, to $6.18.

Some critics, however, say the proposal doesn't go far enough. Junius Peake, a business professor at the University of Northern Colorado, says the NYSE proposal still allows too big a role for specialists and is intended to appease an important Big Board constituency rather than do what's best for investors.

The specialist firms are paying members of the NYSE.

The trading proposal comes in the aftermath of a tumultuous year for the NYSE, which began with the furor over former Big Board Chairman Richard Grasso's enormous pay package. The controversy led to Grasso's resignation from the NYSE and an overhaul of the exchange's board.

The Grasso episode also rekindled a debate about the labor-intensive way in which stocks are traded on the Big Board. Critics suggested that the former NYSE chairman had resisted the expansion of electronic trading because it would have been harmful to the financial interests of the specialist firms.

Criticism of the specialist system grew only louder after a joint investigation by the SEC and NYSE found numerous trading violations by the firms. The investigation culminated with the seven specialist firms paying nearly $250 million in fines and restitution.