NYSE Arca

The New York Stock Exchange building on August 9, 2011, when Deutsche Bank's db-X Group commenced trading on NYSE Arca.[1]

NYSE Arca, previously known as ArcaEx, an abbreviation of Archipelago Exchange, is an exchange on which both stocks and options are traded. It is owned by Intercontinental Exchange and is headquartered in Chicago.[2]

Early reports indicate that NYSE Arca may have played an early role in the 2010 Flash Crash.[3]

History

In November 1994 TerraNova Trading LLC is founded in Chicago by Stuart Townsend and Gerald Putnam in order to establish an electronic securities exchange. Its product, Archipelago, started accepting trading orders on 20 January 1997.[4] Archipelago is one of the first ECNs and a precursor to the Archipelago Exchange (ArcaEx) that was created in 2001 to facilitate electronic stock trading on US stock exchanges.

In 2005, Archipelago Holdings, the owner of ArcaEx, bought the Pacific Exchange, after what had been a close working relationship since 2001.[5]

Archipelago Holdings merged with NYSE Group in April 2006 in a reverse takeover and the business was renamed NYSE Arca.

Market share

As of 1 March 2007, NYSE Arca is the second largest electronic communication network in terms of shares traded. Approximately one out of every six shares traded on the American financial markets is traded on the system. For New York Stock Exchange-listed securities or Tape A, it accounts for just over 10% of the shares traded. For NASDAQ-listed securities, NYSE Arca accounts for approximately 20% of the trading volume. For exchange-traded funds, NYSE Arca accounts for 30-40% of the traded volume.

Fees

NYSE Arca's liquidity fee/rebate structure resembles that of other electronic communication networks. In late 2006, it was the first one to offer NASDAQ-style fees on New York Stock Exchange-listed securities, a move that was soon copied by NASDAQ and other electronic communication networks. NYSE Arca charges traders that remove liquidity from the Arca-book $3.00 per 1,000 shares. Traders that add liquidity receive a $2.00 rebate per 1,000 shares. Traders that route orders out of the NYSE Arca system are charged $1.00 per 1,000 shares for Tape A securities and $4.00 per 1,000 shares for other securities.

References

  1. ↑ Deutsche Bank`s db-X Opens NYSE Arca on August 9, Reuters
  2. ↑ http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=7960146 NYSE Arca Overview, Bloomberg BusinessWeek
  3. ↑ Phillips, Matt (11 May 2010). "Nasdaq: Here's Our Timeline of the Flash Crash". The Wall Street Journal.
  4. ↑ Free Encyclopedia of Ecommerce: Archipelago Holdings LLC, retrieved 30 Dec. 2011.
  5. ↑ York, New (January 4, 2005). "Archipelago to buy the Pacific Exchange". Chicago Tribune.

External links