NYSE Arca Inc.

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NYSE Arca
NYSE Arca.JPG
Headquarters New York, NY, USA
Website www.nyse.com

NYSE Arca is an arm of NYSE Group that trades equities and exchange-traded funds on an all-electronic platform. [1]

NYSE Arca uses a system of competing market makers, who are required to maintain adequate minimum capital and continuous, two-sided quotes for all registered securities from 9:30 a.m. to 4:00 p.m. ET. They also clear and settle transactions through a registered clearing agency. NYSE Arca appoints Lead Market Makers (LMMs) for ETPs (Exchange Traded Products) with a primary listing on the exchange to meet defined obligations in exchange for incentives such as lower transaction fees.[2]

History

NYSE Arca was originally the Archipelago Exchange, owned by Archipelago Holdings, which became part of the NYSE Group in 2006.

In 2005, Archipelago Holdings acquired PCX Holdings Inc., the parent of the Pacific Stock Exchange. The deal brought Archipelago the exchange's electronic system for trading stock options as well as the self-regulatory license that allowed the exchange to police itself. The deal also included PCX's 20-percent stake in the Options Clearing Corporation (OCC).

Key People

Flash Crash Response

On July 15, 2010, NYSE Arca filed with the SEC to introduce a new price collar designed to safeguard the execution of market orders. The new collar will prevent market orders to buy stock from executing or routing to another trading venue at a price above the collar.[3] Conversely, market orders to sell will not execute or route at a price below the trading collar. The collar for issues priced $25 or less will be 10 percent above or below the last trade price; for issues priced above $25 up to and including $50, the collar will be 5 percent; and for issues above $50, the collar will be 3 percent. These limits also will help prevent erroneous trades from inadvertently triggering the individual-stock circuit breakers introduced last month, and are consistent with those in the newly implemented rules concerning the cancellation of erroneous trades.

The collar was the latest in a series of steps[4] by the exchange aimed at protecting investors against a repeat of the May 6, 2010, record decline in the stock market, eventually billed as the "flash crash."

Other actions:

• A pilot program of circuit breakers for individual issues was first rolled out on June 11 for stocks in the Standard & Poor's 500.

• An expansion of the above pilot program to cover 344 exchange traded products plus all stocks in the Russell 1000 index is planned for later this month, pending SEC approval.

• All markets have proposed amendments to existing rules concerning clearly erroneous trades, to make the cancellation of such trades -- when they occur in connection with an individual stock circuit breaker -- transparent and predictable for market participants.

• NYSE Arca has revised its market order routing to further enhance its interaction with the New York Stock Exchange when a Liquidity Replenishment Point has been reached and other individual-stock safeguards imposed by primary markets.

Categories of Listed Stocks

NYSE Arca lists Tier I companies [5] and Tier II companies [6].

  • Tier I is designed for large capitalization mature companies. Federal securities laws provide that Tier I listed companies are exempt from all state registration requirements, known as "blue sky laws."
  • Tier II is designed for smaller issuing companies. A listing on Tier II provides these issuers with exemptions from certain "blue sky" requirements.

References

  1. "NYSE Arca Listings”. www.nyse.com.
  2. NYSE Arca Equities Market Making. NYSE.
  3. Press Release. NYSE Euronext.
  4. Press Release. NYSE Euronext.
  5. "Tier 1”. www.nyse.com.
  6. "Tier II”. www.nyse.com.

Also see

Pacific Stock Exchange