The Gateway to Algorithmic and Automated Trading

SEC approves speed bump on NYSE MKT

First Published 17th May 2017

NYSE MKT to rebrand to NYSE American

The SEC announced on Tuesday that it will amend its rules to allow NYSE, owned by ICE, to implement a "speed bump" on its NYSE MKT exchange. A subsidiary of NYSE, the MKT exchange specializes in small caps. As part of the introduction of the speed bump, it will be re-branded as NYSE American and will now trade all National Market System (NMS) stocks, as opposed to the around 370 small cap stocks currently. Trading will move from a floor-based model with parity allocation to an electronic model, using NYSE's Pillar technology with price/time priority allocation. The name change is a nod to NYSE MKT roots as the American Stock Exchange (AMEX).

The move will allow head-to-head competition between NYSE American and IEX, both of which will operate with the same delay of 350 microseconds. The exchanges will differ in their implementation of the speed bump, with NYSE American applying software while IEX uses hardware. As a condition of the SEC approval, NYSE American will have to "periodically monitor the latency and adjust the latency as necessary to achieve consistency with the 350 microsecond target" and will have to apply to the SEC should it wish to adjust the delay up or down.

To head off criticism that the imposition of a delay could create advantages for some market participants, NYSE has said that the delay on outbound messages will occur to all recipients of market data save for the Securities Information Processor (SIP) and that the delay on inbound messages will be "applied uniformly to all users". The implication is, of course, that SIP subscribers will now receive the data before direct subscribers - in another twist of ever-evolving complexity surrounding the US equity universe.

The move to rebrand the exchange as NYSE American is rather ironic: Jeffrey Sprecher, ICE CEO and therefore incidentally the head at NYSE as well, called IEX "un-American" precisely for its attempt to introduce the 350 microsecond speed bump back in 2016.

Find the SEC statement here.