Firms bypass Big Board floor to execute many program trades

Article Abstract:

Up to six million shares a day are being traded on electronic systems that emphasize program trading. Such transactions are executed through Jefferies and Co's Posit system and Instinet's Crossing Network, which are 'off-exchange' systems that are not covered by New York Stock Exchange (NYSE) statistics. Such systems offer low commissions of one or two cents a share, and they promise strict confidentiality to avoid leaks that might move the market against large program trades. Investors can be large - huge pension funds, for example - and operators of off-exchange systems are hoping that widespread sentiment against program trading will bring more such clients to them. Most of Posit's business occurs during business hours; the Crossing Network operates after the NYSE closes.

Analysis, Services, Instinet Group Inc., Electronic Trading System, Posit (computer network), Crossing Network (computer network), Jefferies and Company Inc.

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Big Board faces fight on trading; Contel heads group of listed companies against programs

Article Abstract:

Several companies listed on the New York Stock Exchange's Big Board are seeking to alter the method of program trading by protesting to the exchange, the federal government and to the program-trading firms. Program trading, which accounts for about 14 percent of volume, has turned the Big Board into a 'gambling casino,' they say, because it makes the market so volatile. About half all program trading is stock-index arbitrage, which critics say accelerates market movements and increases the chance of a crash. Big Board management has refused to remedy complaints about program trading from investors, in fear that arbitragers will take their business to other exchanges such as London's. One solution is to ban the high-speed electronic trading system used in program trading.

Public opinion, New York Stock Exchange Inc., CTC

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Bear Stearns lifts program trading halt

Article Abstract:

Bear, Stearns and Company Inc will resume program trading, a method of stock trading that opponents believe is responsible for too-rapid fluctuations in the stock market. Bear Stearns will also resume index arbitrage, the most maligned method of program trading. Bear Sterns had previously pulled back from both computer-driven methods of trading. One major change in Bear Stearns' new method is that all stock selling will be done as a result of upticks in the market rather than downticks. The new application should keep individual stocks from being sold in volume while the market is falling. Other program trading companies may follow Bear Stearns' lead and also end voluntary suspension of program trading.

Management, Usage, Bear, Stearns & Company Inc.

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