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Thread: Shhh, NYSE Aims to Bring Back Blocks

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    Default Shhh, NYSE Aims to Bring Back Blocks

    from http://online.wsj.com/article/SB1193...us_whats_news:

    "Block trades, or chunks of stock that trade together, were once a staple of the New York Stock Exchange. But in recent years, as more trading has gone electronic, investors have turned to computer algorithms to slice orders greater than 10,000 shares into smaller pieces of a few hundred shares at a time. This gives traders, who often want to guard their trading strategies, anonymity.

    Now, the exchange, owned by NYSE Euronext, is hoping to reverse this trend in a joint venture to be announced as early as today with a dozen Wall Street firms that the NYSE hopes will help it regain market share while addressing the Street's desire to do big trades discreetly.

    The joint venture will be half-owned by the Big Board and half-owned by a Wall Street consortium called BIDS Holdings LP, a New York upstart owned by 12 brokerage firms that control a trading platform designed to help big traders complete trades without necessarily showing their hand.

    The Wall Street firms behind the effort include Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. It is expected to start in the second quarter of next year.
    The yet-to-be-named venture will specialize in putting big investors together who have orders of 10,000 shares or more. For the NYSE, the move represents a push by President Duncan Niederauer to regain market share at the exchange.

    Mr. Niederauer says institutional investors would like it to be easier to trade large blocks.

    "It's the single biggest thing we hear from our customers," says Mr. Niederauer, who joined NYSE this year from Goldman. "The market structure we've ended up with is great for trading, but it's not great for investing."

    Despite increasing competition, NYSE is still enjoying rising volumes because of its own electronic enhancements and a rising tide of trading activity, but the declining activity in big trades has been unrelenting. Since January 2004, the monthly activity in block trading at the exchange has declined 78%, from 494,600 trades to 107,800 trades last month.

    Big trades are especially profitable for exchanges like NYSE, because they can garner a trading fee without eating up costly technology resources that thousands of small trades do.

    In recent years, more big trades have gone away from exchange to newer platforms run by companies like Liquidnet Holdings Inc., Investment Technology Group Inc. and Pipeline Trading Systems LLC because they offer quick and anonymous trade executions.

    Last year, six Street firms -- Citigroup, Goldman Sachs, Morgan Stanley, Merrill Lynch & Co., UBS AG and Lehman Brothers Holdings Inc. -- set up BIDS, which stands for Block Interest Discovery Service."


    So I wonder how is it possible that in the times when the transactions are "transparent", someone will be given the opportunity to make their large block trades descretely. Without the jeneral public knowing about it? Exiting the markets quickly and secretly when the time comes?.. Does it mean the major downturn in the market is being anticipated, but no, the general public doesn't need to know about it?

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    Default Re: Shhh, NYSE Aims to Bring Back Blocks

    It's kinda fucked up isn't it? I think it just doesn't show up on the regular bid or ask, but the transaction will still show up on the tape. I consider it a bad thing because it gives "large players" an edge since they can see these orders, but j6p can't.

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