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NYSE mulls electronic trading shift

The new chief of the New York Stock Exchange, John Thain, is considering a shift to electronic trading, marking a possible major change for the 211-year-old Big Board, according to a source familiar with the matter.
/ Source: Reuters

The new chief of the New York Stock Exchange, John Thain, is considering a shift to electronic trading, marking a possible major change for the 211-year-old Big Board, according to a source familiar with the matter.

Thain, with less than two months on the job, is preparing a report to be discussed by the NYSE's newly formed board of directors at its next meeting, scheduled for Feb. 5, the source said.

Thain, the former president of Goldman Sachs Group, has been speaking to members of the exchange ahead of the board meeting in order to get a consensus on his ideas for changing the exchange, the last major exchange to still use human-based trading via its specialist system.

Despite Thain's long association with Goldman Sachs -- which owns specialist firm Spear, Leeds & Kellogg -- he has said more electronic trading would be good for the market. "I do think more of the trading will be done electronically," Thain told Reuters in December.

At the same time though, Thain said the exchange, which already does a great deal of trading electronically, still needs specialists.

"I believe specialists are important to the functioning of the marketplace ... they deal with all kinds of large, complicated trades," he said at that time. "It is very important that the specialists continue to play a role on the floor of the exchange."

Under Thain's new proposal, an electronic system would be used to automatically match investors' stock orders that represent the best prices to buy and sell shares at a given time, according to a story in Friday's edition of the Wall Street Journal.

The paper said the system would enhance the floor's current trading technology, which permits the automatic execution of small stock orders but leaves the large ones to individual specialists.

An NYSE spokesman had no comment on the story.