NYSE Chairman Grasso Announces Proposed NYSE Initiatives

Speaking before the Securities Industry Association (SIA) in Boca Raton today, New York Stock Exchange Chairman and CEO Richard A. Grasso announced a series of proposed NYSE initiatives, including an internet-based trading system, designed to reengineer the NYSE as it repositions for the new millennium. "Today, we are both the leading and largest market in the world," Grasso said. "The changes I've discussed today will further enhance the NYSE's position as the center of global business today ... and tomorrow." Central to the Exchange's initiatives is the creation of an internet-based electronic order book, which will provide member-sponsored direct execution for orders of 1,000 shares or less. Additionally, Grasso announced an NYSE rule change which ensures that any system order executed within five minutes will be free of specialist commissions. This change impacts 85 to 90 percent of system orders delivered to the Exchange. Other Exchange initiatives will include: A new product which provides a live "virtual" depiction of the NYSE trading floor and enables customers of member firms to "watch" as orders are executed. This new product will also provide market information previously available only on the NYSE floor; Institutional XPress, a previously-announced initiative slated for spring 2000 delivery; and e-broker, a new wireless hand-held computer to be used by NYSE floor brokers, which will integrate trading floor price discovery with the new virtual book. "These initiatives, which signal fundamental changes in the way we do business, will lower investor costs, and provide more advanced and faster connectivity for investors through their broker dealers, and ensure the continued delivery of best execution," Grasso said. Grasso said the Exchange would use the internet-based platform for its entry into extended hours in 2000. It will provide investors with the safeguards available through regular NYSE trading and, according to Grasso, would be "more transparent than anything available to investors today. "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. "As we've talked with investors and constituents, all want the most liquid markets with guaranteed best execution, all want the integrity that the NYSE, and all want lower costs with faster executions and the reliability and transparency only the Exchange is known for." Through this platform, any of America's 80 million direct shareowners, empowered by an NYSE member firm, will have access to live, real-time information about the new system's limit order book, and the ability to execute trades. It also allows member firms, for the first time, to preference their customer orders. The Exchange expects to file with the SEC for approval of the new platform before year-end, and, subject to the Commission's approval, the system would be operational in the second quarter of 2000, before the conversion to decimal pricing. "Investors will see the limit order book; they'll see the liquidity at any time in any issue; and they'll be able to act on that information within our structure and with our safeguards," Grasso added. "This system will be available during and beyond our regular trading hours, when appropriate." Through a separate product, member firm-enabled investors will be able to view a virtual trading floor model, seeing order flow and trading in any of the NYSE's 3100 stocks. They will be able to monitor trading flows and, with their broker's sponsorship, enter and execute orders. Grasso cited as "vital" the initiative to increase to five minutes the "window" for providing commission-free transactions on systemically-delivered orders. "This ensures that more than 85 to 90 percent of the system orders delivered to the NYSE will be free of specialist commissions," Grasso said. The NYSE's previously-announced initiative, Institutional XPress, is also slated for spring 2000 delivery. Grasso also discussed the development of the new wireless hand-held computer, called e-broker. This full-function order management system, to be used by NYSE floor brokers, will combine the benefits of broker execution with the speed and efficiency of electronic delivery systems. It will seamlessly link the floor broker to the new electronic platform, ensuring an integrated market and the best execution of all orders. The device offers anonymity, enables users to have choices in execution selection and provides rapid dissemination of value-added information.