Stock Exchange NewsWrap
By Journal of Indexes Staff

NYSE In The News

The New York Stock Exchange recently made a dramatic announcement about plans to radically shift its structure to allow vastly more electronic trading. Unbeknownst to many, indexing and ETFs sit squarely on the frontlines in the move toward electronic trading.

On the NYSE now, orders up to 5,000 shares of an ETF now go straight through electronically, something many at the NYSE had resisted (like UTPs, in fact) for a long time. It now appears that this foot in the door was a harbinger of more widespread electronic trading at the NYSE.

Even among specialists, opinion is divided: from a belief that things will remain as they are, to everything is inevitably going electronic, to everything between. The move may further fuel discussion (again) of a potential Nasdaq/ NYSE merger. Add the fact that every ECN is losing money, and that institutional investors insist on instant execution, and the times they are a changing.

In the meantime, the NYSE has quietly added both primary and UTP ETF listings to the exchange, with a large new group joining the fray last week. After a reluctant entrance into the ETF trading business, the NYSE has jumped in with both feet.

Without so much as a press release, the NYSE last week began trading 24 more ETFs on an unlisted trading privileges (UTP) basis, , bringing the total number of UTP ETFs to an even 60. The new Morningstar iShares and the NYSE iShare ETFs bring listed ETFs up to 16, meaning that the NYSE's total of 76 ETFs has tipped the magical halfway mark of the 151 ETFs trading in the U.S. and includes just about any ETF with any significant volume.

For a complete listing of the listed and UTP ETFs available on the NYSE, visit the ETF area of the NYSE.com Web site.

As a sidelight, the NYSE reported on its Web site that shortly after the announcement of the NYSE's intention to move to more electronic trading, a seat on the Big Board sold for $1.25 million, and the current bid for a seat was at $1.11 million, with the current offer at $1.30 million. This marks the lowest price for an NYSE seat since December of 1998. Just two years ago, seats on the NYSE were going for $2.5 million.

NYBOT Trading At Record Highs As Seat Price Reaches Record

With two trading days remaining in June, total monthly volume at the New York Board of Trade hit an all-time high, with 3,396,713 futures and options contracts changing hands during as of June 28, the exchange reported. The previous monthly record at NYBOT "soft" commodity exchange was 3,369,065 futures and options contracts, set in March 2004.

In 2003, the NYBOT set new trading highs, such as the largest-ever total annual futures and options volume in its history, with 24,832,158 combined futures and options contracts being traded. This figure surpassed the previous record of 21,477,856 contracts set in 1999. NYBOT is trading at a torrid pace in 2004, with six consecutive total monthly volume records, as well as futures and options records in Sugar No. 11 and Coffee "C," and Russell 1000 and U.S. Dollar Index futures.

"Our agriculture and financial markets continue to show strong overall performance during the first half of 2004," says Charles H. "Harry" Falk, NYBOT president and CEO. "This latest record, one of many we've seen over the last year, is testament to the vibrancy and growth of our markets, and we look forward to seeing continued growth during the rest of the year."

NYBOT also announced new record seat prices for full seats purchased for the exchange. The new records prices were set in early August, first of $230,000 and then $240,000.

Nasdaq Community Bankers Index Goes Live

The America 's Community Bankers NASDAQ Index has gone live. The new index, which focuses on listed community banks and has the symbol ABCQ, was founded in December of last year. As part of a bid to raise the profile of the index, NASDAQ will disseminate an intraday price that is updated every 15 seconds. Previously, the index value was published once a day on a total return basis.

"The provision of intraday price quotes will allow participants to make much better-informed decisions about this group of community banks, which play an essential role in capital formation and job creation at the local level." says John Jacobs, chief executive of NASDAQ Financial Products Services.

The index is equally weighted and is calculated on a total return basis. It is the flagship index for America 's Community Bankers, the only national banking group that has developed and promoted an index. Their aim is to build interest in member banks and support the equity prices of these stock-owned community banks. The index currently includes over 500 community banks and has a market capitalization of about $175 billion. The index excludes large and internationally focused banks and thrifts.

The ACB index was launched on December 2, 2003 , with a base index value of $250. As of market close on August 11th, the index was valued at $249.19 for a total return of -0.32% since inception; the Dow's return over the same time period was 0.94%.

Euronext.liffe Has Migration Date For Amsterdam Derivatives

Euronext.liffe, the derivatives arm of the Euronext group, will move its Amsterdam derivatives from SWITCH to the LIFFE CONNECT trading platform on September 27, 2004 . The transfer completes the final stage of Euronext.liffe's two-year program to provide a single trading platform for all of its derivatives products.

Euronext's derivatives markets in Brussels , Lisbon , London and Paris moved to the updated version of LIFFE CONNECT, equities on August 9 and financials on August 23. Euronext.liffe is Euronext's derivatives business, comprising the Amsterdam , Brussels , LIFFE, Lisbon and Paris derivatives markets.

Over € 1 ,500 billion is traded through Euronext.liffe daily, making it the world's second largest derivatives exchange. Euronext.liffe is creating a single market for derivatives by consolidating its derivatives products on a single electronic trading platform, LIFFE CONNECT. By replacing multiple trading venues with a single market, cross-border trading will be easier and cheaper.

Eurex US Receives Regulatory Clearance

Following regulatory clearance in early July, Spanish and Italian market participants can now trade directly on Eurex US , the new electronic U.S. futures and options exchange.

Regulatory clearance from the Spanish Comisión Nacional del Mercado de Valores and the Italian regulator CONSOB have boosted market participants to 14 countries. Currently 33 European member firms are connected to Eurex US .

In addition to Spain and Italy , Austria , Belgium , Denmark , Finland , Germany , Gibraltar , Ireland , Sweden , Switzerland , the Netherlands , the Unites States and the United Kingdom can now access Eurex US .

Eurex US recently introduced a new market maker program during European trading hours. The new program encourages participants to provide liquidity during European trading hours, thereby further connecting European and U.S. investors in U.S. Treasury futures.

Trading on Eurex US began in early February 2004. With recent approval by international regulatory authorities, Eurex US expanded its offering to include futures and options on Euro denominated interest rates and indexes as well as U.S. indexes.

Eurex Turnover Increases For First Six Months

Eurex closed the first half of 2004 with more than 553 million contracts, up by about 5% over the same period in 2003. The most heavily traded contract was once again DJ Euro STOXX 50 index futures which, at approximately 10 million contracts at the end of May 2004, exceeded May 2003 by 28%.

Options on the DJ Euro STOXX 50 index for the same period grew 36% to approximately six million contracts. The Italian equity option segment, which was expanded in February, reached a new record of 16,170 contracts, besting its highest previous level of 15,328 contracts. In mid-July, institutional and private investors began trading futures on the Dow Jones Italy Titans 30 as well as options on the 12 most liquid Italian stocks.