NYSE Arca Inc.
|New York, NY, USA
NYSE Arca (originally the Archipelago Exchange) was the first all-electronic exchange in the U.S. It currently trades more than 8,000 exchange-listed securities and is ranked #1 in the listing and trading of exchange-traded products (ETPs), including ETFs.
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.
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).
Flash Crash Response
In 2010, NYSE Arca introduced a new price collar designed to safeguard the execution of market orders. It was designed to prevent market orders to buy stock from executing or routing to another trading venue at a price above the collar. Conversely, market orders to sell do not execute or route at a price below the trading collar.
The collar was the latest in a series of steps by the exchange aimed at protecting investors against a repeat of the May 6, 2010, record decline in the stock market known as the "flash crash."
• 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
- 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.