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NYSE to Provide More Data for Large Orders

March 16, 2001

The New York Stock Exchange plans Monday to begin providing indications whether large orders for stocks are available within a few cents of a stock's current price--an attempt to alleviate institutional investors' concerns about the effects of penny pricing.

The NYSE will start with eight stocks, including Lucent Technologies (LU) and Gateway (GTW), and gradually expand the program to all 427 NYSE-listed Standard & Poor's 500 stocks by March 28, the exchange said.

The move to disseminate more information comes after big investors complained that decimal pricing, introduced Jan. 29, made the market a more difficult place to buy and sell large blocks of stock.

Under fractional pricing, most stocks traded in 1/16ths of a dollar, or 6.25-cent increments. With decimal pricing--which the NYSE adopted as part of federal regulators' plan to simplify stock trading--investors can quote stocks in any penny increment.

Because investors' quotes are so diffused now, big investors say they have had trouble quickly executing large trades at a given price. Institutional investors also have complained that professional NYSE traders are "stepping ahead" of their orders--bidding just a penny more than an institutional bid, for example, and thus leaving that order unfilled.

Under the new plan, the NYSE will provide "depth indications" for stocks when it has received orders as large as 20,000 shares and within 15 cents of the best prices to buy and sell. The exchange said market data vendors, such as Bloomberg, the parent of Bloomberg News, will use electronic "flags" on quote screens indicating when there are large orders within 15 cents of the best quote displayed.

In April, the exchange moves to "Phase II," when it will provide more detailed buy and sell order information. The exchange said in the spring it will disseminate all buy and sell orders at specific prices on its Internet site and to market data vendors, so investors can see the level of buying or selling interest at various prices.

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