sessions3_4 - ITSystemsinExchanges WonseokOh Class#3...

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IT Systems in Exchanges Wonseok Oh Class #3 Jan. 12th, 2010
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“It is only regulatory and symbolic barriers that prevent information technology from completely replacing most financial intermediation services. If you are a financial institution and are not scared about the future, you don’t know what’s going on.” -- Business Week, January 19, 1998
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NYSE: Order Processing Systems Common Message Switch (1977) A message forwarding device that links member firms to exchange systems Receives/forward messages to specialist posts where tickets were printe Established first protocol/standard for order routing and electronic trade communication DOT and SuperDOT (1976 and 1984) An order processing system that receives incoming orders from member firms and routes them directly to specialist post or broker booth: Process incoming orders, assigns an order reference number Route orders to trading posts Match buys and sells for the opening and report imbalances to specialists Provide a “circuit-breaker” since the late 1980s when the Dow 30 index has had a large move. http://www.nyse.com/tradingsolutions/connectmarkets/1226489148467.html?sa_campaign=/internal_ads/callouts/utp_video
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NYSE: Order Processing Systems  (Cont’d) Intermarket Trading System (ITS, 1978) Provides an electronic link between the NYSE and competing exchanges, enabling brokers to route orders to all markets nationwide to obtain the best purchase or sale price for a multiply traded security. Direct+ (2000) Automated execution at quoted prices for limit orders up to 5,000 shares with execution times averaging 0.8 seconds. In 2003, over 1 million orders a day were entered and about 100 million shares traded daily (7% of total NYSE volume). Similar to an ECN execution, NYSE Direct+ offers the liquidity of the NYSE quote but without floor broker fees. Institutional XPress (iXPress, 2001) Provides SuperDOT users electronic order entry and delivery for limit orders of 15,000 shares or more with a guaranteed fill when a bid or offer of 15,000 shares or more is in place for 15 seconds or more. Extent of iXPress order size is limited by the published quoted quantities. iXPress orders receive the benefit of price improvement, but have the certainty of execution
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NYSE: Broker/Specialist Support  Systems Broker Booth Support System (BBSS, 1993) An order management system that enhances brokers processing capability on the trading floor that: Handles booth-routed orders Monitors, reports, and researches orders Wireless Data System/e-Broker (1997) Links off-floor computer desktops to floor brokers’ wireless hand-held devices Allows brokers to receive orders, access market information and transmit execution reports from any location on the trading floor. Provides a fast, always-on connection to floor brokers anywhere on the NYSE floor.
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This note was uploaded on 03/23/2010 for the course INSY INSY434 taught by Professor Oh during the Winter '10 term at McGill.

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sessions3_4 - ITSystemsinExchanges WonseokOh Class#3...

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