NYSE Group has obliged, not only with the rollout of the NYSE Hybrid Market^SM , which will expand customers’ ability to interact with NYSE liquidity, but with enhanced data and market information.  On June 12, NYSE Group launched as a pilot its first two NYSE InfoTools™, a suite of data products designed to enhance customers’ investment decision-making ability by helping them identify trends in order flow behaviors.  The initial products in the InfoTool lineup—ReTrac^SM and ProTrac^SM —allow investors to monitor retail and program trading activity both in real time and historically.  

“We have had a great response and strong interest so far,” said Mark Schaedel, managing director of NYSE Group’s Proprietary Data Products division, of customer response to the initial InfoTools rollout. Since the products were launched, his team has been busy gathering feedback from customers and engaging in dialogues on future enhancements.

“The focus of InfoTools is to help customers better understand the trends underlying NYSE order flow behaviors, a practice that many have become increasingly interested in, particularly quantitative-oriented customers,” said Mr. Schaedel.

With the rapid advance of quantitative and algorithmic trading, customers are clamoring for more information faster—what Mr. Schaedel refers to as the twin demands for depth of information and speed.  InfoTools are meant to satisfy the demand for depth of information, giving customers more granular market information from which to identify trends.  To satisfy the demand for speed, the NYSE plans to introduce a new line of products that will focus on what Mr. Schaedel calls low-latency applications, including real-time streaming of NYSE and Arca trades and quotes directly to customers.  Dubbed “NYSE Level 1,” the streaming data is intended to compete with the Consolidated Tape Association, the securities-industry processor that consolidates all quotes and trades from all participating market centers derived from three tapes:  Tape A with data for NYSE-listed issues, Tape B with data for Amex- and regional-listed issues, and Tape C with data for Nasdaq-listed issues. Mr. Schaedel says NYSE Group can deliver pricing from all three tapes for NYSE and Arca trading up to one second faster on average than the CTA does today, which he says is “hugely significant in the lives of quantitative traders and those who value speed.”

The new and anticipated products follow in the footsteps of NYSE OpenBook™, a popular market data product launched in 2002 that shows aggregate limit-order volume at each bid and offer price in all NYSE-listed issues.  The product was a huge success because it exposed the depth of market in NYSE-listed stocks beyond the best bid or offer.  In May, the NYSE introduced a real-time version of OpenBook—NYSE OpenBook Real-Time®—which was enthusiastically received in the market.

Mr. Schaedel talks about the trends driving the demand for market data, new and upcoming data products, and the opportunities created by the NYSE’s merger with Archipelago. 

You’ve been with the NYSE for seven years. How has demand for market data changed over that time?
The demand has increased in both depth and breadth. More customers are coming to the NYSE directly for information about where they’re sending their order, what’s happening to their order, and what’s happening to other participant orders.  They want greater transparency. Anything related to our trading activity and order flows is interesting to our customers, particularly the quantitative segment. 

What’s driving the demand for data?
The surge in automated trading over the last few years has been a leading driver. Algorithmic and quantitative trading requires more automated forms of input rather than the discretionary color that has traditionally been provided through intermediaries. 

What are customers looking for in market data products?
Quantitative and algorithmic traders, our fastest-growing customer segment, require more granular inputs to build their computer trading models.  So to the extent that we can give them better depth of information and more detailed resolution, they can fine-tune those models and make more informed decisions when reacting to events that take place in the market. Another major theme for our core customers is speed. To the extent that markets are moving faster, customers require faster information about market conditions to be able to react at the speed required in today’s marketplace. So speed and depth are the most important things customers are looking for.

Can you briefly describe NYSE InfoTools and what they aim to do?
NYSE InfoTools are information products that we plan to introduce in phases.  Basically the InfoTools focus is to respond to customer needs for more granular information about the market.  Rather than the traditional means of monitoring market behaviors using trades and quotes, InfoTools decompose that information into its underlying components. We launched the first phase with two products, ReTrac and ProTrac, in May. ReTrac tracks retail trading activity in real time and historically, allowing traders to gauge how retail investors are behaving relative to norms.

What about ProTrac, the other NYSE InfoTool?
ProTrac tracks program-trading executions, also in real time and historically, allowing customers to monitor activity relative to norms. Today program-trading activity makes up about 25 percent of NYSE volume on average and is perceived to be a major market force, so it behooves customers to better understand the behaviors of program trading, which is what ProTrac is focused on providing. Both ReTrac and ProTrac have end-of-day reports that recap the activity during the day. On the ReTrac side, the end-of-day retail report shows for each stock the total amount traded by retail investors as well as the amount of buy and sell shares, which in effect conveys the retail-market sentiment. With ProTrac, we recap the day’s program-trading activity, showing for each stock the total amount of shares that executed under index-arbitrage trading strategies versus all other program-trading strategies.  We offer this information for one year historically as well as each day going forward.  

Why were ReTrac and ProTrac introduced on a 60-day trial basis for free?
The development of products like InfoTools is new for us and our customers. The information is unique and has never been available before. We wanted to give customers a chance to evaluate the products and work with us to shape the future of InfoTools.  After all, they are a lot smarter than we’ll ever be about what they find valuable. 

NYSE OpenBook Real-Time launched in May. How did customers react to the product?
They loved it.  About half of the existing customers of OpenBook signed up for the real-time version on the first day it launched.  We expected customers to take a much longer time to transition, which is why we chose to offer both the five-second and the real-time version for the foreseeable future. 

Do you see any enhancements to NYSE OpenBook Real-Time down the road?
We’ll continue to make it faster. Eventually we will move to an order-by-order format as ArcaBook is today, meaning that as orders are introduced in the book, we’ll show the individual order rather than the incremental shares at each price point.    

How does NYSE OpenBook differ from ArcaBook?
The difference is tied to the different structures of the two markets.  The NYSE is an auction market with multiple sources of liquidity, limit orders being one of those sources.   OpenBook is a display of that limit-order interest.  It shows aggregate limit- order volume at each bid and offer price in each NYSE-listed issue.  Specialists and brokers on the floor also supply liquidity, but their interest is currently not represented in the limit-order book.  NYSE Arca, being a book market, has only one source of liquidity—its book.  As the NYSE moves toward the Hybrid Market, OpenBook provides a more complete liquidity picture as floor brokers’ and specialists’ interaction with the market will be performed through the book. 

To what extent will NYSE and Arca market data products be integrated?  
They will be integrated where it makes sense, but as long as the markets are run independently, so will the information products.  For instance, we will introduce an NYSE and Arca common trade and quote stream early next year, which will share a common format and infrastructure but will remain separate because they represent two markets.  Customers will receive both data streams through a common interface. In other words, where it makes sense to show NYSE Group level activity, our products will be more closely integrated as we have planned for NYSE Broker Volume^SM , which ranks our customers’ trading volume for each stock.  We’re going to include Arca’s trading volume as part of those rankings to show a more complete picture of our customers’ market activity.  We also have a number of other products, including a whole suite of Web-based products that incorporate Arca components. The entire gamut of products from both sides will be integrated into a common platform so our customers can have a streamlined approach to accessing, to contracting, and to everything necessary to get connected.

What do you see as the most significant challenges in developing market data products?
The challenge for us is having the ability to take advantage of all of the opportunities and to make our customers aware of all that we have going on.  The Hybrid Market is going to create an enormous wealth of information from which new products will be created.  Considering the changes to our market, our integration with Arca, and the potential deal with Euronext, we are going to be very busy for a while to come.

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About NYSE Group, Inc.
NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading, and market data products and services. The NYSE is the world’s largest and most liquid cash equities exchange. The NYSE provides a reliable, orderly, liquid and efficient marketplace where investors buy and sell listed companies’ common stock and other securities. On June 30, 2006 , our listed operating companies represent a total global market capitalization of over $ 22.6 trillion. In the second quarter 2006, on an average trading day, almost 1.8 billion shares, valued at over $68.5 billion, were traded on the NYSE. 

NYSE Arca operates the first open, all-electronic stock exchange in the United States and has a leading position in trading exchange-traded funds and exchange-listed securities. NYSE Arca is also an exchange for trading equity options. NYSE Arca’s trading platform provides customers with fast electronic execution and open, direct and anonymous market access.

NYSE Regulation, an independent not-for-profit subsidiary, regulates member organizations through the enforcement of marketplace rules and federal securities laws. NYSE Regulation also ensures that companies listed on the NYSE and NYSE Arca meet their financial and corporate governance listing standards.

For more information on NYSE Group, go to www.nyse.com. Information contained on our Web site does not constitute a part of the prospectus relating to the proposed offering.

Cautionary Note Regarding Forward-Looking Statements
Certain statements in this article may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on NYSE Group’s current expectations and involve risks and uncertainties that could cause NYSE Group’s actual results to differ materially from those set forth in the statements. There can be no assurance that such expectations will prove to be correct. Actual results may differ materially from those expressed or implied in the forward-looking statements. Factors that could cause NYSE Group’s results to differ materially from current expectations include, but are not limited to:  NYSE Group’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Group’s annual report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Group that the projections will prove to be correct. We undertake no obligation to release any revisions to any forward-looking statements.