NYSE Statement on SEC Report On The Comparison Of Order Executions Across Equity Market Structures

We commend the SEC and its Office of Economic Analysis on an impressive report that focuses attention on the quality of order execution. The study - consistent with many others cited in Appendix A of the report - validates our belief that investors benefit from the direct interaction of orders and the high order-flow concentration our market provides. The agency-auction model offers the most efficient method of price discovery, leading to the lowest execution costs and best prices for customers.

Increasingly but still not often enough, investors are empowered to decide where their orders are executed. Research such as this will help these decisions be informed choices. The New York Stock Exchange and its Network NYSE platform are built on a model of investor empowerment, offering customers choice in how they access the liquidity and information in the NYSE market.

Of particular interest in the SEC report:

1. The SEC found dramatically superior limit-order execution rates on the NYSE (tables 22-24). This is significant for investors, as limit orders account for most orders received by the NYSE. Execution rates on the NYSE ranged from 9.3 percent-26.1 percent higher, depending on order size and methodology (table 22).
2. Quoting directly from the report: "As illustrated in Appendix B, the Nasdaq stocks as a whole and in our sample have considerably higher volatilities than those in the NYSE."
3. NYSE execution speed was shown to be fastest in two of the three order-size categories, and comparable in the third. For example, for large stocks, NYSE execution times were 58.5 seconds or 45.2 seconds faster, depending on methodology (table 44).
4. Findings of the NYSE's superior market-execution are consistent across the 11 methodologies used by the report.

To encourage further independent and objective evaluation of the data used by the SEC in its study, we authorize the SEC to release the NYSE data they used to academic researchers on request and free of charge. With respect to Page 4, paragraph 1 of the report, it should be noted that the NYSE provided the SEC with data on all NYSE-listed issues, consistent with standard academic procedures in selecting random samples of stocks (see page 4, paragraph 1).

We attribute the results of the study to the benefits of the NYSE's agency-auction market structure: the most efficient price discovery, the best prices for customers, and the lowest execution costs.