NYSE Takes Additional Steps Toward New Competitive Positioning

The New York Stock Exchange's board of directors yesterday took additional steps toward a new competitive positioning that will ensure the Exchange's status as the center of global business in the new millennium. Last month, the Exchange announced a series of initiatives including: An advanced electronic platform that will provide member-sponsored customers with seamless execution of orders for 1,000 shares or less; A proposal under which any system order executed within five minutes would be free of specialist commissions; A new product that provides a live "virtual" pathway to the Exchange that gives investors, through their member firms, the power to access NYSE real-time, proprietary market information as never before; Institutional XPress, a previously announced initiative slated for spring 2000 delivery; and e-broker, a wireless, hand-held order-management system that enables brokers to be in constant contact with their customers, sending customers market information and receiving orders back based on that information, all in a matter of seconds. Yesterday, the board approved three new measures: The board called for the Securities and Exchange Commission to develop a new rule to require brokerage firms that internalize customer orders to do so only if they can provide a better price than the nationally quoted best bid or offer; The board approved the repeal of Rule 390, which prohibits member firms from trading as principal off an exchange stocks listed on the NYSE before April 26, 1979; and The board also approved a proposal to recommend amending the Intermarket Trading System Plan to allow for access by the National Association of Securities Dealers' Computer-Assisted Execution System for all NYSE-listed stocks. "In its action today, the board continued the process of positioning the NYSE as the most competitive global market. The growth of the Exchange has resulted in Rule 390 applying today to only 23 percent of NYSE-listed stocks producing 46 percent of our share volume. Instead, we need a dialogue on protecting investors in 100 percent of the issues, 100 percent of the time," said NYSE Chairman and Chief Executive Officer Richard A. Grasso. "Our board today signaled a welcome to competition that benefits investors. In this new, highly dynamic landscape, the NYSE is committed to constantly reengineering itself to provide the highest-quality market for investors." Consistent with its commitment to investors, the NYSE board asked the SEC to develop a rule requiring firms that "internalize" customer orders-trade them against their own inventory-to provide a better price than the national best bid or offer. "As competition among markets grows, we have to develop safeguards to ensure that investors are always provided the best possible price," Mr. Grasso added.