Thursday, February 04, 2016

SEC Study: NYSE Trading Suspension Resulted in Migration to Other Exchanges

By Amanda Maine, J.D.

The SEC issued a research paper analyzing the movement of trading following the NYSE’s suspension of trading for over three hours in July 2015. The paper was published on the SEC’s equity market structure website.

The trading suspension, which the NYSE ordered on July 8, 2015, and which lasted between 11:32 a.m. and 3:10 p.m., stemmed from a technical issue related to a software release. The SEC’s paper details the impact of the trading suspension on trading volumes, market share, spreads, and market depth.

The paper notes that, as would be expected, traders migrated to other exchanges, in particular Nasdaq, during the suspension of trading. The paper also states that the data suggests that the trading suspension had the greatest impact on smaller and less actively trading NYSE stock spreads. Large cap stocks were most responsible for the declining average inside dollar depth of stocks listed on the NYSE, while small cap stocks showed a depth increase.

At a media briefing, SEC staff advised that the data is consistent with the prevailing narrative that U.S. equity markets are resilient in the face of an outage of one of its national exchanges. The staff also advised that the report contained no broad conclusions and that its findings could not be extrapolated to other events.

The paper is based solely on publicly available information, particularly the consolidated and exchange market data feeds accessed through the SEC’s Market Information Data Analytics System (MIDAS) system.

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