A Day Like Any Other Day

July 8th was like any other day for traders. They sat down in front of their screens to trade stocks at the best possible prices. Well it was not exactly like any other day because the NYSE trading system was down. The average person on the street thought this was a big deal. The news wires and bloggers made a big deal out of this as well. The fear mongers were at their peak of excitement. People were concerned what would happen to their 401K accounts and their IRAs.

It turns out we live in a new world where stocks are traded on so many different exchanges and ATSs (Alternative Trading Systems) that there is no impact in having the bastion of capital closed for over three hours. We now have eleven different stock exchanges and approximately 40 dark pools to execute trades on. Stocks listed by the NYSE can trade on all of these venues. In 2004, the NYSE had over a 90% market share on the stocks listed at their exchange. Depending on how you calculate the numbers, their market share is now closer to 23%. In 2006 there were major regulatory changes to the industry. Reg NMS was rolled out and it leveled the playing field. Orders no longer had to be solely directed to NYSE or NASDAQ depending on where the stock is listed. In fact orders must be directed to the market with the best price. If there is a better price at BATS or Direct Edge then the orders are obligated to be sent there.

There have been arguments recently that the market place is too fragmented and that we should have fewer trading venues. Days like yesterday show why there is value to that fragmentation. We believe that more venues create greater price transparency and benefits our customers.

At Lightspeed, we have access to all of the exchanges so our customers felt no impact by yesterday’s outage. We continue to build the most robust trading platform and will take every opportunity improve our customer’s experience.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

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