Knight, based in Jersey City, New Jersey, experienced a software malfunction that led to a $440 million loss when it made changes to get ready for NYSE's program on Aug. 1. Chairman and Chief Executive Officer Thomas Joyce said the mishap wasn't NYSE's fault. Knight ceded most of the company to six investors led by Jefferies Group Inc. that provided $400 million in equity financing on Aug. 6.
Average Size
Transactions involving almost 2.7 million shares with an average of $0.0016 in price improvement per share took place through NYSE Euronext's retail liquidity program on Aug. 9, the company said in a statement the next day. The average trade size in the program was about 2,300 shares, compared to less than 300 in NYSE-listed companies at the exchange operator. Brokers provided superior prices to individual investors across more than 540 companies, the company said.
Brokers supplying orders for retail clients on NYSE include high-frequency firms Hudson River Trading LLC, Getco LLC, RGM Advisors LLC, Tradebot Systems Inc. and two units of Virtu Financial LLC, the company said. Keara Everdell, a spokeswoman for NYSE Euronext in New York, said the exchange operator is pleased with the "early success" of its program.
Multiple Prices
Bats will allow retail customers to receive executions at multiple prices, enabling them to get the benefit of shares available across different bids if they're selling stock or many offers if they're buying. NYSE provides executions at a single price -- the lowest bid or highest offer within the program that completes the investor's transaction.
"We believe customers will find the Bats RPI program to be a more innovative approach because it will maximize price improvement for those who use it," Randy Williams, a spokesman at Bats, said in an e-mail.
Any Bats member firm can supply bids and offers to retail customers. Unlike the NYSE program, Bats won't have separate groups of firms with different fees providing liquidity.
William O'Brien, CEO of Direct Edge, said last month his company would offer a plan that focuses on improving both the price and size of executions for retail customers. The company is preparing a regulatory filing for its version for retail investors, Jim Gorman, a spokesman, said yesterday.
Nasdaq OMX also intends to compete with NYSE's retail liquidity program.
The New York-based company's effort will take the form of automated auctions for orders from individuals, Eric Noll, executive vice president for transaction services, said at a conference on May 10. A written presentation said the auctions will be similar to those run on U.S. options exchanges, in which market makers vie to win the investor's order by providing the best price. The auctions last less than a second.